By Theopolis Waters
CHICAGO, Oct 17 (Reuters) – Chicago Mercantile Exchange live cattle futures closed down slightly on Friday after investors digested this week’s prices for market-ready or cash cattle, traders said.
October closed down 0.200 cent per pound to 165.050 cents, and December 0.250 cent lower at 165.050 cents.
Cash cattle this week sold steady with mostly $164 per hundredweight (cwt.) last week, according to feedlot sources.
While fewer animals for sale underpinned cash cattle prices, unprofitable packer margins and lackluster wholesale beef values kept a lid on cash returns.
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Friday afternoon’s Choice wholesale beef price gained 24 cents per cwt. from Thursday to $249.16. Select slipped 14 cents to $234.78, the U.S. Department of Agriculture said.
Beef packer margins for Friday were a negative $71.05 per head, compared with a negative $54.90 on Thursday and a negative $40.05 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
“Seems to be a lot of unease about the seasonal beef demand outlook,” said Dan Vaught, economist with Doane Advisory Service. Bearish traders might be expecting ramped up retail ham and turkey business for the Thanksgiving holiday, he said.
Investors anxiously await next week’s cash cattle prices as packers weigh negative margins against a dwindling supply situation, traders and analysts said.
Most CME feeder cattle contracts settled down the maximum three-cents per lb. daily price limit in thin trading, pressured by live cattle weakness.
Traders cited the exchange’s feeder cattle index for Oct. 16 at 243.32 cents, compared to 243.81 cents for Oct. 15.
October, which will expire on Oct. 30, closed 1.750 cents per lb. lower at 238.450 cents. November and January ended at 234.150 and 228.125 cents, down 3.000 cents.
HOGS CLOSE HIGHER
Pre-weekend short-covering and barging hunting after recent market losses lifted CME hogs futures, traders said.
December finished up 0.250 cent per lb, to 90.575 cents, and February rose 1.100 cents to 87.550 cents.
Lower-trending cash hog and wholesale pork prices limited December buying and generated bear spreads. Those spreads consisted of traders who sold December and simultaneously bought back months.
The afternoon’s average hog price in Iowa/Minnesota was down $1.84 per cwt, from Thursday at $98.27, according to USDA.
Separate government data showed Friday afternoon’s wholesale pork price, or cutout, dropped $2.71 per cwt from Thursday to $111.01, led by the $5.40 decline in pork belly costs.
Seasonally, more hogs are available which is putting pressure on cash prices and adding more tonnage to the wholesale sector, a trader said.
“Friday’s market rally may be more of a dead-cat bounce considering the fundamental picture remains somewhat bearish,” he said.
