Chicago | Reuters — Chicago Mercantile Exchange live cattle futures gained modestly on Wednesday, aided by their discounts to this week’s cash price expectations, said traders.
They said sufficient supplies and seasonally tepid wholesale beef demand capped market advances.
April live cattle closed up 0.05 cent/lb. to 118.275 cents, and June up 0.125 cent to 109.425 cents.
Investors are unsure what to do, given possibly lower cash prices while futures remain at a discount to those potential cash returns, said JRS Consulting owner Jack Salzsieder.
The lack of animal sales at Wednesday morning’s Fed Cattle Exchange reflected lack of packer interest in purchasing cattle at higher prices.
Nebraska packers responded by lowering bids for market-ready, or cash, cattle from $124 to $122/cwt with no response from sellers. Kansas bids held at $125 against $130 asking prices there and in Texas.
Last week most of the cash cattle in the U.S. Plains brought $128-$130/cwt.
There are more cattle for sale than last week and packers have at their disposal a huge number of animals contracted against the futures market.
Two packing plants are scheduled to be offline later this week for maintenance. Negative packer profits will also discourage them from bidding up for supplies.
Wednesday afternoon’s average wholesale beef price slumped $1.98/cwt to $209.71 from Tuesday. Select cuts were up 12 cents to $200.51, the U.S. Department of Agriculture said.
CME feeder cattle were pressured by lower cash feeder cattle prices, but supported by slight live cattle market gains.
April feeder cattle closed 0.5 cent/lb. lower at 130.525 cents, and May up 0.125 cent to 130.425 cents.
Uneven hog market settlement
Bearish market fundamentals pressured CME April lean hogs and prompted investors to sell that contract and simultaneously buy deferred months, said traders.
April hogs ended down 0.05 cent/lb. to 63.625 cents, and May closed up 0.175 cent to 68.35 cents.
A seasonal supply bump has pressured cash prices and could drag down wholesale pork values in the coming weeks, said traders and analysts.
Wednesday afternoon’s average cash hog price in Iowa/Minnesota at $60.94/cwt declined 23 cents from Tuesday, USDA said.
U.S. government data on Wednesday afternoon showed the average wholesale pork price at $74.87/cwt, down 63 cents from Tuesday.
USDA estimated Monday through Wednesday’s total hog slaughter at 1.333 million head, 34,000 more than a year ago.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.