By Theopolis Waters
CHICAGO, May 2 (Reuters) – Chicago Mercantile Exchange live cattle futures ended lower on Friday after a choppy session, dragged down by profit-taking that trumped steady-to-higher prices for market-ready or cash cattle, traders said.
On Friday, cash cattle in Texas traded at $146 per hundredweight (cwt), up $1 from last week, feedlot sources said. Cash cattle in Kansas fetched $146, which was steady with a week ago.
Cash cattle in Nebraska sold from $147 to $150 per cwt, compared to $146 to $148 last week, a feedlot source said.
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Some processors needed cattle for next week and feedlots held out for more money while eyeing improved packer margins, traders said.
But, slack beef demand and expectations for seasonal increase in cattle numbers reversed the market’s early-session spike to new contract highs.
Friday afternoon’s wholesale choice beef price fell $1.96 per cwt from Thursday to $228.38. Select cuts tumbled $3.51 to $217.47, based on U.S. Department of Agriculture data.
The industry typically slaughters more cattle in May and June, said Linn Group analyst John Ginzel. Also, packers slashed beef prices to move product due to the late start of the spring grilling season, he said.
CME live cattle may start Monday’s session mixed, given futures’ bullish discount to cash prices versus problematic beef sales, a trader said.
June live cattle closed 1.200 cents per lb lower at 138.050 cents, after spiking to a new contract high of 139.950.
August finished 1.225 cents lower at 137.350. It marked a fresh contract high of 139.575 cents.
CME feeder cattle finished mixed after hitting an all-time high for a second day in a row.
Nearby feeder cattle futures slipped with lower CME live cattle, but back months drew support from lower corn prices.
May closed 0.450 cent per lb lower at 183.500 cents, and August down, 0.150 cent to 190.325.
September closed up 0.125 cent to 191.100 cents, and October 0.350 higher at 191.325 cent.
MORE HOG FUTURES LOSSES
CME hogs extended losses for a fourth day in a row as ample supplies curbed packer demand for slaughter-ready hogs, traders said.
The afternoon’s average hog price in the closely-watched Iowa/Minnesota market dropped 46 cents per cwt to $112.33, according to USDA.
Futures’ price premium to CME’s hog index, at 115.12 cents, sidelined potential buyers.
And, fund liquidation and sell stops ensued after the July contract slipped beneath the 10-day and 40-day moving average convergence level of 122.479 cents.
Recent CME hog market behavior suggests some funds are reversing the previous trend of being long hog futures and short the cattle market, said Ginzel.
That possible shift is likely associated with lower cash hog prices and higher cash cattle returns, he said.
May hogs closed 0.150 cent per lb lower at 117.225, and June down 0.575 cent at 122.225 cents.
