U.S. livestock: CME live cattle down again on supply growth outlook

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle on Friday slid for a second straight day, pressured by increased supply expectations, said traders.

Some investors sold CME live cattle contracts despite Friday’s wholesale beef price uptick and futures’ discounts to this week’s cash returns.

April live cattle closed 0.6 cent/lb. lower at 121.25 cents, and June ended 0.55 cent lower at 111.75 (all figures US$).

This week, packers paid $126-$128/cwt for slaughter-ready, or cash, cattle that a week ago fetched mostly $126.

Friday afternoon’s wholesale choice beef price rose 60 cents/cwt from Thursday to $225.59. Select cuts climbed 55 cents, to $216.86, according to the U.S. Department of Agriculture (USDA).

“Cattle seem to be dealing with the same relatively lacklustre beef demand, especially with pork prices dirt cheap compared to relatively expensive beef,” said independent CME livestock futures trader Dan Norcini.

There are lingering concerns about bigger cattle numbers ahead, partly fueled by drought in the southern U.S. Plains, based on the most recent USDA monthly cattle, he said.

Next week, all eyes will be on impressive profits for packers and whether they are successful at charging retailers more for beef heading into the spring grilling season, analysts and traders said.

Live cattle futures losses dropped CME feeder cattle to their lowest level since August.

“It’s going to be tough for feedlots to turn a profit after paying more for calves a few months ago than they’re worth now and corn at $4 per bushel,” a trader said.

March feeders ended 0.65 cent/lb. lower at 139.975 cents.

Hogs ease to three-month low

CME lean hogs drifted to a three-month bottom on lower cash and wholesale pork values along with profit-taking in deferred months, traders said.

However, late-session speculative buying lifted deferred trading contracts from session lows, they said.

Back-month hog futures tumbled earlier on what appeared to be second guessing about pork demand during that period, but the intensity of the selloff faded, Norcini said.

Traders may be looking past mediocre near-term meat demand tied to Lent and forward to improving post-Easter business with the onset of warmer weather for cook-outs, he said.

April hogs closed down 0.275 cent/lb. at 65.45 cents. May finished unchanged at 72.75 cents. June ended down 0.05 cent to 79.125 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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