U.S. livestock: CME feeder cattle limit down as corn prices jump

Chicago | Reuters — Lightly-traded Chicago Mercantile Exchange feeder cattle futures closed down their 4.5-cent per pound maximum daily limit on Thursday following double-digit corn market gains, traders said.

Chicago Board of Trade corn futures surged as much as three per cent on worries heavy rainfall could reduce U.S. Midwest crop belt yield potential.

High-priced feed means increased input costs for feedlots.

Technical selling and lower CME live cattle contracts further pressured feeder cattle futures.

August closed at 219.05 cents/lb. (all figures US$).

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The CME feeder cattle trading limit will be expanded to 6.75 cents on Friday after Thursday’s limit-down settlement.

Live cattle end lower

CME live cattle fell for a third straight day on fund liquidation and weak cash price expectations, traders said.

June settled 2.175 cents/lb. lower at 148.5 cents, and August down 1.75 cents at 148.575 cents.

Market-ready (cash) cattle bids in U.S. Plains were at $147 versus feedyards asking $150 to $152, feedlot sources said. Last week, cash cattle in the U.S. Plains traded at $150.

Despite profitable margins, solid beef cutout values and fewer cattle for sale this week, packers that were buying for the U.S. July 4 holiday-shortened workweek were not actively seeking supplies, traders said.

Beef packer margins for Thursday were at a positive $108.80 per head, their highest so far this year, as calculated by HedgersEdge.com, fuelled by lower cash and higher wholesale beef values.

Thursday morning’s wholesale choice beef price slipped 28 cents/cwt from Wednesday to $255.84. Select cuts rose $1.12, to $251.51, the U.S. Department of Agriculture said.

“If they (packers) have to, they can afford to pay up but will not now that they seem to have feedlots on the run,” said Oak Investment Group president Joe Ocrant.

Bearish fundamentals weaken hogs

Softer cash and wholesale pork values pared initial CME lean hog futures gains, traders said.

July closed down 0.075 cent/lb. at 74.65 cents, and August 0.2 cent lower at 72.15 cents.

Cash hogs in the Midwest Thursday morning sold steady to down 50 cents/cwt from Wednesday, pressured by sufficient supplies that also pulled down wholesale pork prices, regional hog dealers said.

Government data quoted Thursday morning’s wholesale pork price at $82.63/cwt, down 92 cents from Tuesday.

Investors await Friday’s USDA quarterly hog report that analyst expect could show herd expansion during the March through May quarter.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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