CHICAGO, Jan 27 (Reuters) – Chicago Mercantile Exchange live cattle futures settled weaker on Friday ahead of the U.S. Department of Agriculture’s monthly Cattle-On-Feed report at 2 p.m. CST (2000 GMT), said traders.
Analysts, on average, expect the report to show 8.4 percent more cattle were placed into U.S. feedlots in December than a year earlier.
February live cattle closed 0.375 cent per pound lower at 118.325 cents, and April down 0.250 cent to 117.325 cents.
Investors looked ahead to next week’s prices for slaughter-ready, or cash, cattle that this week brought mostly $122 per cwt, nearly matching last week’s sales.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Processors are mindful of their extremely negative margins and may continue to curb production and lower cash bids as a result, a trader said regarding next week’s cash price prospects.
Market participants will closely monitor beef cutout values that could move up as packers trim slaughters and grocers feature product for early February.
Friday’s average beef packer margins were a negative $74.10 per head, up from negative $82.85 on Thursday, as calculated by HedgersEdge.com..
Friday morning’s choice wholesale beef price, or cutout, rose 69 cents per cwt from Thursday to $193.69. Select cuts were up 14 cents to $189.88, the USDA said.
CME March feeder cattle was supported by its discount to the exchange’s feeder cattle index for Jan. 25 at 132.62 cents.
Other feeder cattle contracts were pressured by live cattle futures weakness.
March closed up 0.350 cent per pound at 127.450 cents. April was unchanged at 126.750 cents and May down 0.025 cent to 125.125 cents.
Short-covering and technical buying reversed some of Thursday’s CME lean hog losses, said traders.
February hogs ended 1.050 cents per lb higher at 66.900 cents, and April 1.075 cents higher at 68.300 cents.
Friday morning’s firmer wholesale pork values and anticipation of steady to firmer cash prices provided additional futures support, said traders and analysts.
“I think some packing houses are short on supplies for next week and some of them will pay up for hogs today,” a western Corn Belt hog merchant said.
He was less concerned about a potential U.S. trade war with Mexico, a major pork importer, after the leaders of both countries spoke by phone on Friday.
