Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished mixed on Monday as investors bought the February contract and sold deferred months as they priced in last week’s cash returns, traders said.
February live cattle closed up 0.3 cent per pound at 141.5 cents and April ended down 0.225 cent at 140.175 cents (all figures US$).
Cash cattle in Nebraska last week fetched up to $141 per hundredweight (cwt), compared with $146 the week before, according to feedlot sources who were hard-pressed to find cattle sales elsewhere in the U.S. Plains.
“Packers didn’t actively chase cattle as their margins came down and beef prices unraveled,” a feedlot source said.
Beef packer margins for Monday were estimated at a negative $112.25 per head, compared with a negative $98.95 per head on Friday and a negative $46.35 a week ago, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price, or cutout, was $210.99/cwt, up 22 cents from Friday, but $9.27 lower than a week ago. Select cuts were at $208.99, down 20 cents from Friday and $10.58 lower than last week, based on U.S. Department of Agriculture data.
Packers have begun curtailing slaughter rates to recoup lost margins and halt the slide in beef cutout values.
USDA put Monday’s cattle slaughter at 92,000 head, 18,000 less than a week ago and down 27,000 from last year.
The prospect of tighter cattle supplies in the coming months generated buying into market declines during the otherwise quiet session.
CME feeder cattle gained on technical buying and weak Chicago Board of Trade corn prices.
March ended up 0.1 cent/lb. at 167.9 cents, and April finished at 168.8 cents, 0.275 cent higher.
Mixed hog trade
Hog futures at the CME settled mixed as traders sold the spot February contract and bought April futures before the spot month expires on Feb. 14.
February hogs closed at 86.35 cents/lb., down 0.225 cent, and April ended at 94.75 cents, up 0.025 cent.
Investors are keeping a close watch on cash hog prices.
Some packers purchased supplies for the rest of this week’s production while others have needs met into the U.S. President’s Day holiday on Monday, traders said.
USDA data showed the morning’s average hog price in the eastern Midwest up 14 cents/cwt to $80.53. Hog prices elsewhere in the region were not available.
A major East Coast hog packing plant was offline on Monday for mechanical repairs, traders and hog dealers said.
The government estimated Monday’s hog slaughter at 400,000 head, 28,000 fewer than last week and down 16,000 from a year earlier.
Futures’ premium to the exchange’s hog index at 84.24 cents at times sidelined would-be buyers.
By the same token, worries about reduced hog supplies this summer as the porcine epidemic diarrhea virus spread among U.S. hog farms lifted those CME contracts to new highs.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.