U.S. livestock: CME cattle repeat lows before USDA report

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday sank to new contract lows, and hit their lowest in 16 months, for a third consecutive session, pressured by lackluster wholesale beef demand, traders said.

Investors exercised caution before the U.S. Department of Agriculture’s monthly Cattle on Feed report today at 2 p.m. CT.

Spot-October closed 0.85 cent/lb. lower at 136 cents after posting a fresh contract low of 135.825 (all figures US$). December ended at 138.375 cents, down 0.95 cents after making a new low of 138.025.

Ample numbers of cheaper heavyweight cattle benefited packer margins, but took their toll on cash and wholesale beef values, the traders said.

The morning’s wholesale choice beef price tumbled $3.31/cwt, to $227.19, from Thursday. Select cuts dropped $1.97, to $219.73, USDA said.

Early on Friday, market-ready (cash) cattle bids surfaced in Texas at $135-$136/cwt versus up to $142 asking prices, feedlot sources said.

This week, they said, cash cattle in Kansas and Nebraska brought $135-$136/cwt, $4 to $6 lower than last week.

Cash and beef prices should gradually recover into the fourth quarter as demand picks up for the Thanksgiving and Christmas holidays, “but we’ve got to clean up some of these front-end supplies,” said CattleHedging.com president Larry Hicks.

CME feeder cattle again mimicked live cattle futures’ retreat to new contract lows and slide to a 16-month bottom.

September feeder cattle, which will expire on Sept. 24, finished 0.4 cent/lb. lower at 192.8 cents and made a low of 191.125. October closed 1.975 cents lower at 185.825 cents, after posting a fresh low of 184.625 cents.

Mostly weak hog settlement

Higher wholesale pork prices supported the CME October lean hog contract that also kept pace with the exchange’s hog index for Sept. 16 at 70.97 cents, traders said.

Cash price uncertainty in the face of a seasonal supply buildup undercut remaining hog trading months, they said

Spot October ended up 0.475 cent/lb. at 71.05, December closed down 0.2 cents at 64.15 cents and February finished 0.325 cent lower at 68.375.

Friday morning’s wholesale pork price was $1.18/cwt higher than on Thursday at $83.53, fueled by the $5 rebound in pork belly costs, according to USDA.

The morning’s cash hogs in the Midwest traded mostly steady with Thursday’s prices, according to regional hog dealers.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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