By Theopolis Waters
CHICAGO, Oct 18 (Reuters) – Trade in Chicago Mercantile Exchange live cattle futures on Friday was a lot calmer than the wild technically triggered drop on Thursday.
Investors bought live cattle, thinking Thursday’s selloff, a reversal partly triggered when cash cattle flirted with record highs, was overdone.
“The market was extremely quiet with people not knowing which direction to go after yesterday’s wild downward reversal,” said R.J. O’Brien floor manager Jim Brooks.
Another factor in Thursday’s market was talk of a possible strike at JBS’s plant in Greeley, Colorado.
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This week, cash-basis cattle traded at mostly $129 to $130 per hundredweight , $1 to $2 higher from last week. It flirted with the $130 all-time high for the week ended March 2, 2012, feedlot sources said.
Fewer available cattle and recently improved wholesale beef prices convinced packers to raise bids for supplies. Those higher cash prices pressured packer margins.
Friday afternoon’s average wholesale choice beef price, or cutout, was at $196.29 per cwt., up 26 cents from Thursday. Select cuts fell $1.74 to $179.98.
Estimated margins for U.S. beef packers on Friday were a negative $44.30 per head, compared with a negative $46.70 on Thursday and a negative $37.40 a week ago, according to HedgersEdge.com.
“I don’t think futures will get much higher until they find out if packers can sell the meat,” K&S Financials analyst Jack Salzsieder said.
The U.S. Department of Agriculture released its weekly beef and pork export results on Friday.
That data showed U.S. beef sales last week at 12,800 tonnes, mostly to Japan. It compares with 9,300 tonnes on Sept. 26, the last time USDA issued the report.
USDA on Thursday said it will delay its monthly cattle-on-feed report to Oct. 31 from Friday, Oct. 18.
Most analysts polled by Reuters for the cattle report said feedlot placements last month likely increased 1.6 percent from a year earlier as corn costs declined.
Live cattle October closed 0.725 cent per pound higher at 129.875 cents. December finished at 132.025 cents, up 0.250 cent and in line with the 20-day moving average of 132.03 cents.
CME feeder cattle ended mixed, with the higher live cattle market offering support while pressured by profit taking.
October closed at 166.075 cents per lb., 0.225 cent higher while November ended down 0.050 cent to 166.850 cents.
HOGS DROP ON CASH JITTERS
Investors sold CME hogs in response to lower cash prices, traders said.
The government Friday afternoon showed the average price of hogs in the most-watched Iowa/Minnesota market at $90.83 per cwt., down 57 cents from Thursday.
More hogs are available as cool fall temperatures and newly-harvested corn allows hogs to quickly put on weight, pumping more pork into the retail pipeline.
That was not the case last summer when drought pushed feed costs to all-time highs, which forced producers to grow hogs to lighter weight or downsize their herds.
USDA data showed the wholesale pork price, or cutout, Friday afternoon at $94.30 per cwt., $1.58 lower than on Thursday.
The USDA on Friday reported U.S. pork export sales last week at 21,800 tonnes, mainly to Mexico, compared with 9,500 tonnes the last time the data was available on Sept. 26.
Friday’s pork export outcome was the second highest since USDA began issuing the data on April. 4 when it was 48,400 tonnes.
“It’s hard for me to get excited about that pork export number when I’ve not seen it for two weeks,” a trader said regarding the lapse in USDA information due to the government shutdown.
December hogs closed 0.500 cent per lb. lower at 87.950 cents and February finished at 90.050 cents, down 0.475 cent.
