U.S. livestock: CME live cattle down fourth straight session

Chicago | Reuters — Monday saw Chicago Mercantile Exchange live cattle futures slide for a fourth consecutive session, dragged down by slumping seasonal beef demand that could again pressure cash prices for this week, traders said.

August closed down 0.875 cent/lb. to 146.625 cents, and October 0.7 cent lower at 149.75 cents (all figures US$).

Monday morning’s wholesale choice beef price dropped 78 cents/cwt from Friday to $236.20. Select cuts fell $1.31, to $232.68, the U.S. Department of Agriculture said.

Last week, market-ready (cash) cattle sold at $150 to $151.50/cwt versus mostly $148 to $152 the previous week, feedlot sources said.

Product sales and packer margins are major challenges for the cash market, said CattleHedging.com president Larry Hicks.

“Beef relative to pork is too high,” said Hicks. Along with increased pork and decreased beef production, there is now a shift in packer margins, he said.

Beef packer margins for Monday were at a negative $51.75 per head, compared with a negative $24.70 on Friday and a positive $86.55 a week ago, as calculated by HedgersEdge.com.

August led losses after funds involved in CME’s livestock markets sold or “rolled” that contract and simultaneously bought deferred months. The strategy, known as the “roll,” is tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).

Monday was the fourth of five days for the S+P GSCI roll procedure.

Soft front-month CME live cattle futures and higher corn prices erased early-session feeder cattle futures gains.

August closed down 0.025 cent/lb. to 211.4 cents.

Hogs up with fundamentals

CME lean hogs brushed off initial losses helped by the morning’s firm cash and wholesale pork prices that offset Friday’s bearish fundamentals, traders said.

July, which will expire on July 15, ended up 0.1 cent/lb. to 79.075 cents, and August 0.3 cent higher, at 74.025 cents.

The average price of cash hogs in Iowa/Minnesota on Monday morning were at $78.21/cwt, 73 cents higher than on Friday, the USDA said.

Monday morning’s wholesale pork price at $81.64/cwt, up 85 cents from Friday.

A few processors and grocers may be rounding out near-term inventories, but packer margins remain in the red and there is no shortage of pork, a trader said.

August futures garnered more support from its discount to CME’s lean hog index for July 9 at 79.24 cents, he said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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