CHICAGO, Feb 4 (Reuters) – Most Chicago Mercantile Exchange live cattle contracts closed weak on Thursday, after investors sold deferred months and bought February in anticipation of at least steady cash prices by Friday, traders said.
Packers in Kansas and Texas on Thursday bid $138 per cwt for market-ready, or cash, cattle, which matched last week’s sales, said feedlot sources. They said cattle owners are holding out for at least $140.
Some processors are hesitant to spend more for supplies while coping with unprofitable margins, said traders and analysts.
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Thursday’s average beef packer margin was a negative $19.60 per head, down from a negative $15.05 for Wednesday and a negative $4.05 a week ago, as calculated by HedgersEdge.com.
But some cash prices may find support after Tuesday’s potent winter storm shut down some plants that reduced the flow of product to retailers, which forced them to pay more for beef.
The morning’s wholesale choice beef price climbed 86 cents per cwt from Wednesday to $223.43. Select cuts rose 78 cents to $218.80, said the U.S. Department of Agriculture.
CME live cattle future’s fluctuated throughout the morning, stirred by their supportive discounts to last week’s cash prices while at times pressured by periodic U.S. stock market losses.
February live cattle closed up 0.225 cent per lb to 137.075 cents, April ended down 0.100 cent to 135.650 cents and June finished 0.275 cent lower at 124.800 cents.
Weak cash feeder cattle prices and soft back-month live cattle futures sent CME feeder cattle contracts lower. March feeders closed down 1.425 cents per lb to 156.525.
A few packers short on supplies following weather-related disruptions in the western corn belt encouraged CME lean hog futures buyers, traders said.
The government estimated Thursday’s slaughter at 401,000 head, down from 435,000 last week.
Analysts and dealers forecast Saturday’s kill around 200,000 head, which will include plants making up downtime due to Tuesday’s blizzard.
The morning’s cash prices in the Midwest held steady, according to regional hog dealers.
Investors are monitoring recent wholesale pork price weakness that suggests some retailers may have bought enough product prior to the storm.
The morning wholesale pork price on Thursday fell 82 cents per cwt from Wednesday to $76.41, mainly pressured by $3.45 lower rib values, USDA said.
Spot February and April ended 0.575 cent per lb higher at 65.125 and 70.250 cents, respectively.
