By Theopolis Waters
CHICAGO, Jan 28 (Reuters) – Chicago Mercantile Exchange live cattle futures on Tuesday moved downward in anticipation of possibly steady-to-lower cash prices this week, traders said.
More cattle are available for sale than a week ago. Packers are reluctant to spend more for supplies to the detriment of their profitable margins.
Indications are that the wholesale beef cutout is close to topping out with retailers booking product hand-to-mouth as beef prices hover around record highs.
The afternoon’s wholesale choice beef price, or cutout, was $235.80 per hundredweight (cwt), $2.24 lower than on Monday, and select cuts tumbled $3.39 to $233.67, according to USDA data.
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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.
On Monday, a small number of cash cattle in Texas moved at $146 per cwt, about $1 lower than a week ago for the state, a feedlot source said. He said packers have not responded to cattle sellers in Kansas and Texas who are asking $150 for their animals.
Last week, the bulk of cattle in the U.S. Plains sold up to $150 per cwt, a record high.
Friday’s USDA cattle-on-feed report showed historically tight cattle supplies, but one has to wonder if it is tight enough to drive cash prices up any higher than they have been, said Brock Associates analyst Doug Houghton.
February futures led losses as investors sold that contract and bought deferred months ahead of the first notice day for live cattle deliveries in about two weeks.
February live cattle closed 0.600 cent per lb lower at 142.550 cents, and April ended down 0.200 cent to 140.350 cents.
CME January feeder cattle closed 0.450 cent per lb higher at 171.425 cents, led by the exchange’s feeder cattle index at 171.35 cents.
The weaker CME live cattle market pressured remaining feeder cattle futures.
March ended 0.425 cent lower at 168.375 cents,
and April finished down 0.500 cent to 168.900 cents.
HOGS SLIP ON LOWER CASH
CME hog futures followed cash prices lower, traders said.
Moderating temperatures over the next several days will allow more hogs to come to market that backed up farms due to harsh weather, they said.
“The industry is having trouble getting through the backlog of hogs at heavier weights,” said Houghton.
The morning’s average price of hogs in the closely watched Iowa/Minnesota market slumped $2.33 per cwt lower from Monday to $78.25 in relatively light trade volume, according to USDA.
April futures bore the brunt of the day’s losses due to its premium to CME’s hog index, which was at 81.23 cents.
Speculators bought summer hog contracts with the view that the spread of the Porcine Epidemic Diarrhea virus (PEDv), which is fatal to baby pigs, could reduce hog supplies at that time, analysts and traders said.
February hogs closed at 85.275 cents per lb, down 0.300 cent, and April ended at 93.575 cents, 0.725 cent lower.
