CHICAGO, July 8 (Reuters) – Chicago Mercantile Exchange live cattle futures gained modestly on Friday, but eased from session highs, helped by their discounts to this week’s cash prices that fell shy of expectations, traders said.
August ended 0.425 cent per lb higher at 112.225 cents, and October finished up 0.100 cent to 112.325 cents.
On Friday morning, the bulk of market-ready, or cash, cattle in the U.S. Plains brought $119 to $120 per cwt, steady to $2 lower than last week, said feedlot sources.
Futures’ recent retreat and shrinking packer margins deflated early-week cash price optimism driven by lighter cattle weights, a trader said.
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Packers also bought supplies for the first full week of production after the Fourth of July holiday.
Early on Friday, CME live cattle showed promise after breaking through technical resistance barriers, only to return below them after encountering fund liquidation.
“I firmly believe the futures market has been hijacked by computer driven trading. It has no relationship to cash what so ever,” said David Hales, author of the Hales Cattle Letter.
Cash prices face challenges ahead as more animals come to market and hot summer weather hurt beef demand.
The morning’s choice beef price was at $209.35 per cwt and select cuts at $196.28. Both were 70 cents lower than on Thursday, the U.S. Department of Agriculture said.
Friday was the first of five days in which funds in CME’s livestock markets that track the Standard & Poor’s Goldman Sachs Commodity Index periodically sold, or “rolled,” August long positions mainly into October.
CME feeder cattle felt pressure from higher corn prices, which could increase input costs for feedlot operators. August feeders closed 0.175 cent per lb lower at 143.450 cents.
Fund rolling along with soft cash and wholesale pork prices weighed on CME lean hogs, said traders.
July, which will expire on July 15, ended 1.000 cent per lb lower at 80.050 cents. Most actively traded August finished down 1.300 cents to 78.825 cents.
Midwest cash hog prices Friday morning were steady to 50 cents per cwt lower, according to regional hog dealers.
Friday morning’s wholesale pork price dipped 4 cents per cwt from Thursday to $89.45 per cwt, after rib prices dropped more than $2, USDA said.
Packer inventories are thought to be full through early next week, and grocers replenished meat cases after Monday’s holiday, traders and analyst said.
