By Meredith Davis
CHICAGO, May 26 (Reuters) – Chicago Mercantile Exchange live cattle closed lower on Tuesday on profit-taking, traders said.
The U.S. government’s monthly cattle on feed report issued Friday morning pressured CME live cattle that afternoon, and the market retained a weak tone on Tuesday.
The focus is now shifting from last week’s cattle on feed report to this week’s cash cattle trade.
Last week, cash cattle in the U.S. Plains traded at $159 to $161 per cwt, steady to down $2 from the previous week, sources said.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Bear spreading, traders selling front-month contracts and buying the deferred months, also dragged on the CME June and August live cattle futures, traders said.
Tuesday morning’s Choice wholesale beef price rose 25 cents per hundredweight (cwt) from Friday to $260.50. Select cuts rose $1.13 to $248.75, the USDA said.
June closed 0.325 cent per pound lower at 151.800 cents, and August 0.075 cent lower at 150.625 cents.
CME feeder cattle drew support from lower corn prices and firm back-month live cattle futures.
August ended up 0.600 cents at 219.600 cents, and September was 0.525 cents higher at 218.525 cents.
HOG FUTURES END LOWER
Weaker cash prices and soft hog demand, coupled with a stronger U.S. dollar, dragged on CME lean hogs, traders said.
June closed down 0.550 cent per lb. at 83.175 cents, and July closed down 0.925 cent lower at 82.800 cents.
Plants were closed over the U.S Memorial Day holiday, but some will add production time on Saturday, dealers said.
The holiday-shortened week limited the need for additional hogs and most packers have slaughter supplies filled through the end of this week, traders said.
USDA data quoted Tuesday afternoon’s wholesale pork price at $86.65 per cwt., $1.07 higher than Friday.
The U.S. dollar index rose 1.37 percent to 97.331.
“While the dollar doesn’t affect the meats on the day-to-day basis, it is a longer-term trend to monitor. When you get a big move in the dollar, it is going to put a cap on trade,” said Domenic Varricchio of Schwieterman, Inc.
“If the dollar stays up for about two weeks, that uptrend will push commodity prices in general down and cattle and hogs are not excluded from that,” Varricchio said.
