By Theopolis Waters
CHICAGO, Feb 11 (Reuters) – Chicago Mercantile Exchange live cattle futures fell hard Wednesday on profit-taking led by slack meat sales ahead of increased supplies later, traders said.
February closed 0.500 cent per pound lower at 158.600 cents, and April down 2.675 cents to 151.100 cents.
Tuesday’s U.S. Department of Agriculture supply/demand report put 2015 beef production at 24.291 billion lb., up 1.6 percent from the January forecast, based on active cattle herd expansion.
The cattle industry faces supply issues, but the biggest problem is beef is too expensive compared with other proteins, said AgriVisor senior market analyst Dale Durchholz.
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Wednesday afternoon’s Choice wholesale beef price jumped $1.31 per hundredweight (cwt.) from Tuesday to $239.74. Select cuts surged $2.80 to $236.36, USDA said.
Less beef was available after packers cut slaughter rates to improve their margins and offset higher prices for market-ready or cash cattle.
Government data on Wednesday showed packers processed 97,000 head of cattle, 3,000 fewer than last week.
Investors look for short-bought packers to spend the same or more than last week for supplies.
On Wednesday, packers bid $161 per cwt. for cash cattle in Kansas with no response from sellers, feedlot sources said. Last week, cash cattle in the U.S. Plains moved at $160 to $162.50.
April live cattle futures selling accelerated after it drifted below the 20-day moving average of 151.17 cents.
CME feeder cattle futures ended down sharply on technical selling and live cattle market losses.
March closed 3.275 cents per lb. lower at 198.750 cents, and April down 3.025 cents at 198.700 cents.
HOGS SAG WITH CASH PRICES
CME lean hogs ended lower as packers resisted spending more for supplies as U.S. meat exports suffered amid continued gridlock on the West Coast, traders said.
Shipping lines are expected to curtail cargo operations at U.S. West Coast ports again this weekend.
February, which will expire on Feb. 13, closed down 0.300 cent per lb. to 61.225 cents, and April fell 2.750 cents to 63.825 cents.
The afternoon’s average cash hog price in Iowa/Minnesota dropped $1.17 per cwt from Tuesday to $58.41, USDA said.
USDA’s supply/demand report predicted 2015 pork production up 5.6 percent from last year to 24.103 billion pounds.
Less impact from the deadly pig virus and farmers moving hogs to market to make room for more pigs aggravated the bearish tone in the cash and futures markets, said Durchholz.
