Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures settled lower on Wednesday after sluggish wholesale beef demand renewed expectations for weak cash prices by Friday, traders said.
Short-covering and bargain hunting freed contracts from session lows, they said. April live cattle, which will expire on Friday, closed 0.8 cent/lb. higher at 126 cents, and June ended 0.95 cent/lb. higher at 117.8 cents (all figures US$).
“Today’s (futures) action is an emotional letdown for fatigued bullish cattle traders looking for the worst to be over. Caution and skepticism continue to dominate,” said Cassie Fish, author of industry blog The Beef.
The morning’s wholesale choice beef price fell $2.68/cwt from Tuesday to $215.89. Select cuts slumped $2.71, to $207.67, the U.S. Department of Agriculture said.
Beef is competing with plentiful, lower-priced pork and chicken at a time when cool, damp weather curbed product demand for backyard cookouts, a trader said.
Despite their hefty profits, packers seem less eager to pay more for cattle with over 21,000 more of them for sale than last week.
Processors are also thought to have ample inventories, bolstered by animals that were bought ahead of time for late-April, early-May delivery.
Bids for market-ready, or cash, cattle in Texas and Kansas were at $124/cwt versus asking prices of $130, said feedlot sources. Last week, cash cattle brought $125 to $128.
Wednesday’s average beef packer margin was estimated at a positive $65.30 per head, up from a positive $60.75 on Tuesday and a positive $12.05 a week earlier, as calculated by HedgersEdge.com.
CME live cattle losses pressured the exchange’s feeder cattle futures.
April feeder cattle , which will expire on Thursday, closed 0.275 cent/lb. lower at 146.3 cents. May ended down 0.1 cent to 145.075 cents.
Lower hog market settlement
Technical buying and upward-trending wholesale pork prices sent CME lean hogs higher, traders said.
Thinly traded May ended 1.775 cents/lb. higher at 76.55 cents, above the 20-day moving average of 75.5 cents.
Most-active June closed 1.65 cents higher at 79.475 cents after surpassing the 100-day moving average of 79.21 cents.
Wholesale pork values gained for a sixth straight session with Wednesday morning’s price at $82.93/cwt, up $1.11 cents from Tuesday, according to USDA data.
Supermarkets are stocking up on product to accommodate grilling demand and advertisements for Mother’s Day on May 8, traders said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.