Profit-taking, beef quotes drop CME live cattle futures

CHICAGO, Jan 11 (Reuters) – Chicago Mercantile Exchange live cattle futures were pressured on Wednesday by profit-taking, partly in response to sharply lower wholesale beef values, said traders.

February live cattle closed 0.400 cent per pound lower at 119.125 cents.

CME live cattle will return to its normal 3-cents trading limit on Thursday after failing to settle at the expanded 4.5-cents limit on Wednesday.

Wednesday morning’s choice wholesale beef price, or cutout, tumbled $2.96 per cwt from Tuesday to $190.42. Select cuts fell $2.06 to $187.91, the U.S. Department of Agriculture said.

“We’ve got a collapse going on in wholesale beef,” said Allendale Inc chief strategist Rich Nelson. He and others anticipated a seasonal decline in the beef cutout price, but not to the extent seen recently.

Typically this time of year, demand for high-end beef cuts tend to suffer as consumers concentrate on paying off year-end holiday debt, said traders and analysts.

Market investors await prices for unsold cash cattle later this week given slumping beef demand, slim packer margins and better-than-expected early-week cash returns.

On Wednesday, animals at the Fed Cattle Exchange on average brought $119.16 per cwt, up from last week’s $116.77 average.

There were no packer bids or offers from sellers for remaining slaughter-ready, or cash, cattle in the U.S. Plains that a week ago brought mostly $118 per cwt.

Wednesday was the third of five days in which funds that track the Standard & Poor’s Goldman Sachs Commodity Index sold, or “rolled,” their February long positions into back months.

At the same time, the annual rebalancing by funds continued, which resulted in increased long positions in live cattle and lean hog futures.

Live cattle futures selling and weaker cash feeder cattle prices pulled the exchange’s feeder cattle contracts from a four-month high.

January feeders closed 0.650 cent per pound lower at 132.050 cents.

Rising cash hog prices and Wednesday’s wholesale pork price turnaround, boosted CME lean hogs, said traders.

February hogs ended up 0.550 cent per pound higher at 65.600 cents.

“Tight supplies and surprisingly resilient product sales were incentives for packers to keep hogs flowing,” a Midwest hog merchant said.

Wednesday morning’s cash hog price in Iowa/Minnesota averaged $58.11 per cwt, $1.71 higher than on Tuesday, the USDA said.

Separate U.S. government data on Wednesday morning showed the average wholesale pork price surged $3.27 to $81.49 from Tuesday, mainly driven by more than $10 higher hams.

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