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Lower U.S. cash prices sink CME live cattle futures; hogs down

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Published: June 12, 2015

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By Theopolis Waters

CHICAGO, June 12 (Reuters) – Chicago Mercantile Exchange live cattle futures fell hard Friday, pressured by lower prices for market-ready, or cash, cattle, traders said.

June closed 2.775 cents per pound lower at 152.450 cents, and August down 2.125 cents to 150.800 cents.

A moderate number of cash cattle in Nebraska sold at $152 per cwt. on Friday, $3 to $4 lower than last week, feedlot sources said. Thursday’s small-volume cash trade in Kansas was $155, which was par with a week ago, they said.

Tight supplies forced packers to push back against higher cash bids by cutting plant hours, which bettered their margins and at times stirred wholesale beef demand.

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Fewer cattle are available partly because ranchers are holding back heifers to rebuild the U.S. herd after years of drought hurt crops, University of Missouri livestock economist Ron Plain said.

Friday morning’s wholesale choice beef price dipped five cents per cwt from Thursday to $247.14. Select cuts rose 64 cents to $241.30, the U.S. Department of Agriculture said.

Beef packer margins for Friday were at a negative $16.90 per head, compared with a negative $21 per head on Thursday and a negative $71.50 a week ago, as calculated by HedgersEdge.com.

Fund selling surfaced after June and August fell below their respective 20-day moving averages of 152.96 and 151.38 cents.

Sell stops, live cattle market losses and technical selling took down CME feeder cattle contracts.

August ended 2.800 cents per lb lower at 223.450 cents.

HOG LOWER AFTER JUNE EXPIRATION

CME lean hogs closed lower, responding to softer cash hog and wholesale pork values, traders said.

The June contract, which expired at noon CDT settled nearly in line with CME’s hog index for June 10 at 81.91 cents.

June closed up 0.075 cent per lb at 81.450 cents, July 1.125 cents lower at 78.050 and August down 1.800 cents to 76.725 cents.

USDA reported Friday morning’s average cash hog price in Iowa/Minnesota had fallen 79 cents per cwt from Thursday to $77.51.

Government data quoted the morning’s wholesale pork price at $85.02 per cwt, $1.48 lower than on Thursday.

Larger-than-expected production afforded packers enough hogs for early next week and grocers enough pork without having to compete for it, an analyst said.

Futures are now underpriced to the exchange hog index, which may stir short-covering on Monday, but some traders are still apprehensive about possibly more supply increases ahead, he said.

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