By Theopolis Waters
CHICAGO, July 15 (Reuters) – After gaining for the first time in five days on Tuesday, Chicago Mercantile Exchange live cattle futures resumed their downward trend on Wednesday, pressured by expectations for lower cash prices this week, traders said.
August closed 0.125 cent per pound lower at 147.025 cents, and October down 0.100 cent at 150.225 cents.
Bids for market-ready, or cash, cattle in the U.S. Plains were $144 to $147 per hundredweight (cwt), against $152 to $153 asking prices, feedlot sources said.
Last week, cash cattle traded at $150 to $151.50.
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But traders are cautious about being too short the market given extreme heat that might slow down cattle weight gains, crimping available supplies, he said.
To improve their margins, packers upped the cost of beef to wholesalers, which may resist those higher prices due to more-affordable pork and chicken, a trader said.
Wednesday morning’s wholesale Choice and select beef prices rose $1.07 per cwt. from Tuesday to $237.11 and $235.03 cents, respectively, the U.S. Department of Agriculture said.
CME feeder cattle drew support from buy stops, technical buying and futures’ discounts to the exchange’s feeder cattle index for July 14 at 224.12 cents.
August closed 1.025 cents per lb. higher at 215.325 cents.
HOGS END MIXED, JULY EXPIRES
CME July lean hogs settled 0.550 cent per lb. higher at 80.475 cents per lb, expiring nearly in line with the exchange’s hog index for July 13 at 80.26 cents.
August, the new lead month, ended 0.625 cent lower at 75.300 cents, pressured by weak cash prices. Speculative buying supported October, which closed up 0.050 cent at 64.975 cents.
The average price of cash hogs in Iowa-0Minnesota on Wednesday morning was at $77.59 per cwt. in light volume, down 17 cents from Tuesday, the USDA said.
While ample supplies allowed some processors to cut cash bids, others were delicately balancing their thin margins and the need for inventory heading into the weekend, traders and hog dealers said.
HedgersEdge.com calculated pork packer margins for Wednesday at a positive $1.25 per head, compared with a positive $2.05 on Tuesday.
Speculators bought deferred contracts in the belief that farmers who are rushing hogs to market now to avoid forecasts for lower cash prices later this year could result in less supplies at that time, a trader said.
