By Theopolis Waters
CHICAGO, Sept 16 (Reuters) – Chicago Mercantile Exchange live cattle futures closed down slightly on Tuesday in anticipation of likely lower prices for market-ready or cash cattle this week, traders said.
October and December live cattle both ended 0.150 cent per lb lower, at 156.200 and 158.875 cents, respectively.
Packers might curb cash cattle spending given their deteriorating margins, tepid wholesale beef sales and more animals available for purchase.
Last week, cash cattle in the U.S. Plains moved at $161 to $162 per hundredweight (cwt), feedlot sources said.
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Tuesday morning’s choice wholesale beef price slipped 40 cents per cwt from Monday to $248.62. Select gained 22 cents to $233.50, the U.S. Department of Agriculture said.
Beef packer margins for Tuesday were a negative $45.00 per head, compared with a negative $41.00 on Monday and a positive $39.25 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
Investors await USDA’s monthly Cattle-On-Feed report that will be released on Friday.
Analysts expect the report to show fewer cattle entered feedlots in August after sufficient grazing land and low-cost feed allowed ranchers to nourish animals outside of feedyards longer.
CME feeder cattle futures closed moderately higher, helped by their discounts to the exchange’s feeder cattle index for Sept. 12 at 230.04 cents.
Traders bought feeder cattle futures as live cattle contracts eased from morning lows. And steady to firm prices for feeder cattle in local markets contributed to late-day CME feeder cattle advances.
September closed 0.350 cent per lb higher at 229.600 cents, and October was at 225.875 cents, up 0.025 cent.
MIXED HOG FUTURES
CME live hogs ended mixed, after investors bought nearby contracts and simultaneously sold back months in a trading strategy known as bull spreading.
October closed 0.800 cent per lb higher at 106.875 cents, and December at 95.925 cents, up 0.075 cent.
February ended 0.800 cent lower at 93.300 cents, and April was down 0.500 cent at 92.100 cents.
Market bulls also bought October with the view that some packers may bid up for supplies in the short term after charging retailers more for pork to offset the recent run up in hog prices.
Pork packer margins for Tuesday were a positive $7.40 per head, compared with a positive $1.90 on Monday and a positive $4.80 a week ago, as estimated by Hedgersedge.com.
Bearish participants believe cash hog prices are about to top out as supplies, and animal weights, start to build seasonally.
Tuesday morning’s average price of hogs in the western Midwest region was down 78 cents per cwt from Monday to $102.71, according to USDA.
