CHICAGO, Sept 29 (Reuters) – Chicago Mercantile Exchange live cattle futures on Tuesday fell by their 3-cent per lb daily price limit as lower-trending wholesale beef values stirred expectations for another round of weaker cash prices later this week, traders said.
Spot-October and December closed at 129.175 and 134.150 cents per lb, respectively. Live cattle’s trading limit will be expanded to 4.5 cents on Wednesday following Tuesday’s limit-down settlement.
Wholesale choice beef prices, or cutout, dropped for a sixth straight session on Tuesday morning to $210.01 cents per lb, down 93 cents from Monday. Select cuts sagged 83 cents to 208.59, the U.S. Department of Agriculture 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.
Last week, market-ready, or cash, cattle moved at $128 to $130 per cwt, down as much as $6 from last week, feedlot sources said.
Future’s tumble, a slight increase in heavyweight cattle for sale from last week, and expectations that seasonal beef demand will not bottom out until around mid-October are bearish cash influences, traders and analysts said.
David Maloni, chief analyst with the American Restaurant Association, pointed out that the choice beef cutout has fallen nearly 10 percent so far in September – the biggest decline for the month since 1989.
“Anytime you see a market that’s doing something really historically abnormal, like we’re seeing in beef right now, tells me we’re going to find a bottom soon,” said Maloni.
Most CME feeder cattle contracts finished down by their 4.5-cent per lb limit following the steep drop in cash feeder cattle prices and live cattle future’s limit-down move. Feeder cattle trading limits will be expanded to 6.750 cents on Wednesday.
October ended at 180.825 cents per lb, down 4.450 cents. November and January finished limit down at 176.950 and 171.200 cents.
Technical buying, along with higher cash and wholesale pork prices, boosted CME lean hogs, traders said.
Spot-October hogs closed 1.825 cents per lb higher at 73.250 cents, and December up 1.300 cents to 67.050 cents.
The USDA reported Tuesday morning’s Iowa/Minnesota average cash hog price at $69.77 per cwt, $1.20 higher than on Monday.
The morning’s wholesale pork price was at $86.20 per cwt, up $1.06 from Monday, according to USDA.
Supermarkets in a few weeks will look to stock meat cases with beef after featuring pork during National Pork Month in October, analysts and traders said.
He added that profitable margins encourage packers to maintain active slaughter rates.
