CHICAGO (Reuters) — Chicago Mercantile Exchange live cattle losses on Tuesday spilled over into Wednesday, pressured by sell stops and fund liquidation despite sharply higher wholesale beef values, traders said.
June closed 1.325 cents per lb lower at US 150.675 cents. August finished down 1.500 cents at 150.325 cents after falling below the 40 day moving average of 150.67 cents.
Wednesday morning’s wholesale choice beef price climbed $2.08 per cwt from Tuesday to $256.21. Select cuts rose $2.37 to $250.36, the U.S. Department of Agriculture said.
Extremely high beef prices mean “you’re likely to see limited beef features by retailers and more pork and poultry products gobbling up space,” said Linn Group analyst John Ginzel.
Despite beef’s high cost, wholesalers bought it for Fourth of July holiday demand as packers at times cut slaughters to expand their margins, traders and analyst said.
Beef packer margins for Wednesday were at a positive $93.37 per head, compared with a positive $75.82 on Tuesday, as calculated by Colorado-based analytics firm HedgersEdge.com.
CME live cattle market investors are conflicted about this week’s cash price direction given recent futures’ losses and extremely profitable packer margins.
Packers have not bid for market-ready, or cash, cattle after sellers in Kansas and Texas priced them at $152 to $153 per cwt, feedlot sources said. Last week, cash cattle in the U.S. Plains moved at $150.
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Technical selling and live cattle market losses pressured CME feeder cattle contracts.
August ended 1.800 cent per lb lower at 223.550 cents.
Nearby CME lean hog futures settled firm and deferred contracts weak after some investors adjusted positions ahead of the USDA’s quarterly hog report on Friday, traders said.
Analysts expect Friday’s report to show continued hog herd expansion during the March-through-May quarter.
July closed 0.375 cent per lb higher at 74.725 cents, and August gained 0.100 cent to 72.350 cents. October ended 0.200 cent lower at 62.925 cents, and December down 0.075 cent to 60.875 cents.
Speculative buyers believe fewer hogs at lighter weights might soon force some processors to pay more for them, especially with supermarkets booking pork for the upcoming three-day holiday weekend.
Wednesday morning’s USDA data showed the average cash hog price in Iowa/Minnesota at $74.00 per cwt, down $1.69 from Tuesday.
Separate government data quoted Wednesday morning’s wholesale pork price at $83.57 per cwt, up 70 cents from Tuesday.
