Lower cash prices drag down U.S. live cattle futures

Chicago Mercantile Exchange live cattle futures sagged on Thursday as lower cash cattle prices weighed, analysts and traders said.

So far this week, cash cattle in Texas and Kansas traded at $124 per hundredweight (cwt), down $1 from a week ago, said feedlot sources (all figures US$).

Packers bought cattle for next week’s slaughter that will be shortened by one day due to the May 25-27 U.S. Memorial Day holiday weekend.

CME live cattle lost ground despite wholesale beef prices eking out a new record high.

The U.S. Department of Agriculture on Thursday morning quoted the wholesale price of choice beef, or cutout, up 15 cents to $211.35/cwt, eclipsing the previous high of $211.20 set Wednesday afternoon.

“Bear traders are in full control of the market,” said Vetterkind Cattle Brokerage president Troy Vetterkind.

“I don’t think we’ve put in our summer low in the futures. Until we get down to probably 116 to 117 cents area, the futures are just going to keep going lower,” he said.

June cattle closed at 119.125 cents, 0.875 cent/lb. lower, and August ended down 1.025 cents, at 118.2 cents.

Feeder cattle futures fell after spot-May’s expiration at noon CT exposed remaining futures’ steep premiums to CME’s feeder cattle index at 131.26 cents.

And lower CME live cattle and firmer corn prices pulled down other feeder cattle contracts.

Spot May settled unchanged at 131.625 cents/lb.

August, the new lead contract, settled at 142.65 cents, down 1.675 cents and September finished down 1.75 cents to 144.95 cents.

Hogs drop with cash

Profit taking, lower cash hog prices and weak wholesale pork values undercut CME hogs, analysts and traders said.

“It was a profit-taking day after the market got ahead of itself after rallying sharply on Wednesday,” said R.J. O’Brien hog futures trader Tom Cawthorne.

The average hog price on Thursday morning in the most-watched Iowa/Minnesota market was $1.56/cwt lower from Wednesday at $89.01, according to USDA data.

USDA’s Thursday morning mandatory wholesale pork price data, or cutout, calculated on a plant-delivered basis was $93.76/cwt, down 34 cents from Wednesday.

Packers are not buying hogs aggressively with plants slated to be closed for Monday’s U.S. Memorial Day holiday and retailers likely booked enough fresh pork to feature during the holiday.

Some investors are concerned that potentially inclement weather in parts of the country could dampen grilling over the three-day holiday weekend.

CME June hogs closed down 0.35 cent, to 94.2 cents, and July ended at 93.025 cents, or 0.4 cent lower.

— Theopolis Waters reports for Reuters from Chicago.

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