By Theopolis Waters
CHICAGO, Oct 21 (Reuters) – Chicago Mercantile Exchange live cattle futures closed lower on Tuesday on profit-taking after hitting an all-time high earlier in the session, traders said.
October closed down 1.350 cents to 166.550 cents per pound, and December was 0.975 cents lower at 167.050 cents per lb.
Upward CME live cattle momentum stalled after investors priced in expectations for market-ready, or cash, cattle prices to be the same or better than a week ago.
Last week, cash cattle in the U.S. Plains traded mostly at $164 per hundredweight (cwt).
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Feedlots held back cattle rather than replacing them, while feeding animals cheaper corn with the intention of turning a profit, said Paul Georgy, president of Allendale Inc.
Packers might raise wholesale beef prices to improve their margins and help pay for what could be high-priced cattle this week, traders said.
Tuesday morning’s Choice wholesale beef price gained 20 cents to $250.04 per cwt. from Monday. Select rose 39 cents to $235.56 per cwt., the U.S. Department of Agriculture said.
USDA will issue the monthly cold storage report at 2 p.m. CDT on Wednesday, which will include total September beef and pork inventories.
A few analysts forecasted an average September inventory total of 343.3 million lb. for beef and 560.1 million lbs for pork.
The government’s monthly Cattle-On-Feed report is at 2 p.m. CDT on Friday.
Most analysts expect Friday’s report to show placements of cattle in U.S. feedyards likely increased last month compared to a year ago.
CME feeder cattle slumped in response to the jump in corn prices and weaker returns for feeder cattle in local markets.
October closed 1.800 cents lower at 238.950 cents per lb., and November was down 2.900 cents at 233.925 cents per lb.
HOGS CLOSE WEAK
Mixed, rather-than-higher, cash hog prices and deteriorating wholesale pork values pressured CME hogs, traders said.
December finished 0.700 cent lower at 88.450 cents per lb., and February was down 0.325 cent to 86.075 cents per lb.
The morning’s average hog price in Iowa/Minnesota was up 44 cents to $97.32 per cwt. from Monday, but down $1.56 to $95.47 in the eastern Midwest region, according to USDA.
Separate government data showed Tuesday morning’s wholesale pork price fell $3.27 to $103.19 per cwt. from Monday, largely due to the $10.34 per cwt. plunge in costs for picnic shoulder cuts.
Some packers may be topping off inventories for the rest of this week’s production, while others have ample supplies that have expanded seasonally, a trader said.
Processors slashed prices for picnic cuts, some of which are made into smoked hams, that will compete with turkeys for the U.S. Thanksgiving holiday, he said.
Futures’ discounts to CME’s hog index for Oct. 17 at 106.78 cents limited nearby contract losses.
