Chicago | Reuters — Chicago Mercantile Exchange live cattle futures dropped to a two-year low for a second consecutive session on Thursday, weighed on by seasonally slack beef demand, traders said.
But, they said, late-session bargain hunting and short-covering lifted CME live cattle from morning lows.
Spot-October closed 2.525 cents/lb. lower at 130.7 cents, after earlier sinking to a new contract low of 128.725 cents (all figures US$). December finished 1.75 cents lower at 134 cents, and marked a new low of 131.7 cents.
“People looked for a reason to buy the technically oversold market, but bearish fundamentals remain in place,” a trader said.
Thursday morning’s wholesale choice beef price fell $1.36, to $216.53/cwt, from Wednesday. Select cuts were down $1.31, to $212.20, the U.S. Department of Agriculture said.
So far this week, market-ready (cash) cattle in Kansas moved at $130/cwt and $129-$130 in Nebraska, which were down as much as $6 from last week.
Packers slashed wholesale beef prices to stabilize their dwindling profit margins and clear a backlog of product from freezers, traders and analysts said.
They said the glut of beef, exacerbated by extra tonnage from heavyweight cattle, pressured cash cattle prices in recent weeks.
CME feeder cattle September, which expired at noon CT, settled 0.725 cents/lb. lower at 194.225 cents and nearly inline with the exchange’s feeder cattle index for Sept. 23 at 195.75 cents.
Live cattle futures losses dragged on remaining feeder cattle contracts. October ended 2.275 cents lower at 180.1 cents, after initially posting a new low of 177.1 cents.
Hogs climb on cash prices
CME lean hogs drew support from short-covering following the morning’s jump in cash values, traders said.
Spot-October hogs closed 1.1 cents/lb. higher at 71.65 cents, and December up 1.6 cents to 65.825.
USDA reported the morning’s Iowa/Minnesota average cash hog price at $69.09/cwt, up 57 cents from Wednesday.
Some packers hiked cash bids to ensure themselves of supplies for the rest of the week, including a projected 150,000-plus head Saturday slaughter, traders and Midwest hog dealers said.
Investors bought nearby contracts and sold deferred months as they adjusted positions before the government’s quarterly hog report on Friday.
Friday’s report is expected to show slower hog herd growth during the June through August quarter than the same period last year.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.