CHICAGO (Reuters) — Chicago Mercantile Exchange live cattle futures closed lower on Wednesday, weighed by caution ahead of this week’s cash prices, traders said.
June closed down 0.100 cent per lb to US 151.950 cents, and August 0.575 cent lower at 150.650 cents.
Cash cattle bids in the U.S. Plains were at $150 per cwt versus up to $157 asking prices, feedlot sources said. Last week, cash cattle sold at $152 to $155.
Much-improved packer margins, thanks to reduced kills that also helped prop up wholesale beef values, are supportive cash price influences, a trader said.
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Beef packer margins for Wednesday were at a positive $24.05 per head, compared with a positive $2.95 on Tuesday, as calculated by HedgersEdge.com.
Wednesday morning’s wholesale choice beef price rose $1.08 per cwt from Tuesday to $250.55. Select cuts climbed $1.87 to $244.43, the U.S. Department of Agriculture said.
USDA estimated Wednesday’s cattle slaughter at 96,000 head, 5,000 more than a week ago, but 17,000 less than on Tuesday.
Some processors will continue cutting kills to conserve their margins while offsetting generally tight cattle supplies, another trader said.
USDA will publish the monthly Cattle-On-Feed report on Friday.
CME live cattle market losses pressured feeder cattle futures.
August ended down 0.125 cent per lb to 224.725 cents.
Short-covering, buy stops and speculative buying pushed up CME lean hogs, traders said.
July closed 0.850 cent per lb higher at 78.000 cents, and August up 0.825 cent to 76.375 cents.
The futures market has priced in the potential supply increase that may be implied by USDA’s quarterly hog report on June 26, said Allendale Inc. chief strategist Rich Nelson.
Despite Wednesday’s soft cash prices, market bulls zeroed in on futures’ discount to the exchange’s hog index for June 15 at 81.02 cents.
USDA reported Wednesday morning’s average cash hog price in Iowa/Minnesota was down 21 cents per cwt from Tuesday to $77.40.
Packers did not have to compete for hogs due to plentiful supplies, traders and analysts said.
From Monday to Wednesday, packers processed 1.273 million hogs, up 7,000 from a week ago, according to USDA estimates.
Some retailers are stocking meat cases for Father’s Day while others focus on 4th of July needs, an analyst said.
Separate government data showed the morning’s wholesale pork price at $86.46 per cwt, up 43 cents from Tuesday led by $4.19 higher pork bellies.
