CHICAGO, July 12 (Reuters) – Chicago Mercantile Exchange live cattle futures on Tuesday sank to a five-year low for a second straight session in anticipation of weak cash prices by Friday, traders said.
August ended 0.450 cent per lb lower at 108.900 cents, and earlier posted a new contract low of 108.175 cents. October finished down 0.425 cent to 108.900 cents after marking a new low of 107.900 cents.
CME live cattle on Wednesday will return to its regular 3.000-cents per lb daily price limit after failing to settle at the newly-expanded 4.5-cent limit on Tuesday.
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On Tuesday, packers in Texas and Kansas bid $116 per cwt for market-ready, or cash, cattle that were priced at $123, said feedlot sources. Last week, cash cattle sold at $119 to $120.
Fallen futures prices, a potential supply increase and seasonal meat sales decline threaten to pressure cash prices.
“They’re (traders) anticipating more cattle than we’re currently seeing. And we’re in the summer doldrums which doesn’t bode well for cattle or beef demand,” JRS Consulting owner Jack Salzsieder said.
The morning’s choice beef price was up 38 cents per cwt to $209.08 from Monday. Select cuts at $196.84 rose $1.44, the U.S. Department of Agriculture said.
Tuesday was the third of five days in which funds in CME’s livestock markets that track the Standard & Poor’s Goldman Sachs Commodity Index periodically sold, or “rolled,” August long positions mainly into October.
Lower CME live cattle futures and higher corn prices dropped the exchange’s feeder cattle contracts. August feeders closed 0.850 cent per lb lower at 138.600 cents.
The morning’s wholesale pork price rebound and CME lean hog futures’ discounts to the exchange’s hog index for July 8 at 82.27 cents lifted contracts, said traders.
July ended up 0.325 cent per lb to 79.950 cents. Most actively traded August finished 0.825 cent higher at 79.175 cents.
Tuesday morning’s wholesale pork price jumped $1.34 per cwt from Monday to $90.88 per cwt, mostly led by almost $5 higher loin prices, said the USDA.
Grocers may be purchasing product to avoid potential shortages as hot weather delays delivery of hogs to packers, a trader said.
Some processors may soon need to raise cash bids to make sure they have enough inventory as the week progresses, he said.
Midwest cash hog prices on Tuesday morning were steady to 50 cents per cwt lower, according to regional hog dealers.
