CHICAGO, June 2 (Reuters) – Chicago Mercantile Exchange live cattle futures Tuesday settled mostly weaker on profit-taking and the morning’s soft wholesale beef prices, traders said.
The reversal of a trading strategy known as bear spreads implemented on Monday propped up the June contract and further pressured August futures.
June closed up 0.150 cent per lb to 153.300 cents, August ended down 0.150 cent to 152.000 cents and October closed 0.225 cent lower at 153.625 cents.
Tuesday morning’s choice wholesale beef price shed 19 cents per hundredweight (cwt) from Monday to $254.09. Select cuts fell $1.61 to $243.01, the U.S. Department of Agriculture said.
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U.S. livestock: Cattle futures end lower in profit-taking, technical correction
Chicago Mercantile Exchange cattle futures declined for a second straight session on Wednesday in a profit-taking and technical-selling correction from recent highs.
CME live cattle contracts’ price value to last week’s prices for market-ready, or cash, cattle mitigated market losses.
Last week, cash cattle in the U.S. Plains moved at mostly $160 per cwt, compared to $159 to $161 the prior week, feedlot sources said.
Dwindling packer margins, tepid wholesale beef demand and packers drawing from supplies contracted against the futures market could pressure cash prices, traders and analysts said.
Tuesday’s beef packer margins were a negative $24.30 per head, compared with a negative $17.25 on Monday, according to HedgersEdge.com.
But, the number of cattle available for sale unexpectedly declined, which might embolden some feedlots to request more money for supplies, the traders and analysts said.
CME feeder cattle were pressured by profit-taking, strong corn futures and live cattle market weakness.
August ended 0.225 cent per lb lower at 223.325 cents.
HOGS SAG WITH CASH PRICES
CME lean hogs posted losses after investors took profits following softer cash values, traders said.
June closed down 0.175 cent per lb to 84.475 cents, and July 0.550 cent lower at 83.800 cents.
USDA quoted Tuesday morning’s average cash hog price in Iowa/Minnesota at $79.63 per cwt, $1.31 lower than on Monday.
Some packers lowered cash bids after buying all the hogs they need for this week, a trader said.
Market participants monitored the pork cutout price for signs that grocers may be snug on inventories heading into Father’s Day.
The government reported the morning’s wholesale pork price, or cutout, at $87.33 per cwt, down 4 cents from Monday.
A few traders sold the June contract ahead of its expiration on June 12.
