By Theopolis Waters
CHICAGO, Feb 12 (Reuters) – Chicago Mercantile Exchange live cattle futures fell modestly on Friday, following this week’s lower cash prices and the potential for further declines next week, traders said.
The CME will be closed on Monday in observance of the U.S. Presidents Day holiday.
Packers in the U.S. Plains this week paid US$128 to $134 per cwt for market-ready, or cash, cattle that last week brought as much as $136, said feedlot sources.
Processors curbed cash spending while grappling with poor profits and seasonally slack wholesale beef sales.
The morning’s wholesale choice beef price slipped 35 cents per cwt from Thursday to $216.67. Select cuts dropped $1 to $213.27, the U.S. Department of Agriculture said.
Beef packer margins for Friday averaged a negative $42.45 per head, compared with a negative $36.75 for Thursday, as calculated by HedgersEdge.com.
CME live cattle futures could not sustain early-session short-covering gains despite the U.S. stock market rally, sparked by the turnaround in oil prices.
“The cash market will stay on the defensive, at least until packers get some sort of margin around them again. And concern over global economic slowdown seems to be weighing on the cattle,” said Archer Financial Services broker Dennis Smith.
February live cattle closed down 0.175 cent per lb to 129.950 cents, and April ended 0.400 cent lower at 129.125 cents.
Soft live cattle futures weakened CME feeder cattle contracts. March closed down 0.225 cents per cwt to 150.025 cents.
LEAN HOGS END HIGHER
CME’s February lean hog contract, which expired at noon CST (1800 GMT), settled up 0.425 cent per lb at 65.950. It almost matched the exchange’s hog index for Feb. 10 at 65.60 cents.
Other trading months drew strength from investors that bought those contracts and at the same time sold CME live cattle futures.
Lean hog fundamentals are more supportive and less vulnerable to stock market volatility than live cattle futures, traders and analysts said.
The morning’s wholesale pork price was up 38 cents per cwt from Thursday to $75.90, the USDA said.
Cash hogs around the U.S. Midwest on Friday morning traded mostly steady with supplies sufficient enough for packer demand, dealers said.
Fund buying developed after April and May broke through their respective 10-day moving averages of 69.60 cents and 76.10 cents.
April closed 0.925 cent higher at 70.375 cents, an
