U.S. livestock: CME live cattle limit down on profit-taking

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange nearby live cattle futures on Friday finished down their three-cent daily price limit, hit by profit-taking after spiking this week to new highs, said traders.

Friday was the first of five days that funds in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index sold, or “rolled,” June long positions into deferred months.

June and August closed at 128.3 and 121.175 cents/lb., respectively (all figures US$). Monday’s limit will be expanded to 4.5 cents.

CME on Friday raised live cattle futures margins in response to market volatility, said traders and analysts.

“Futures hit their tops after packers raced each other for cattle. And you had some liquidation today, partly because of the margin change requirement,” said Vetterkind Cattle Brokerage president Troy Vetterkind.

Tight supplies and impressive wholesale beef demand supported this week’s $140-$147/cwt slaughter-ready, or cash, cattle prices. Cash cattle last week brought $136 to $140.

Robust U.S. exports and spring grilling-inspired beef cutout values also helped drive up cash cattle returns.

Friday morning’s average wholesale beef price, or cutout, climbed $2.19/cwt, to $237.77, from Thursday. Select cuts were up $1.16, to $218, the U.S. Department of Agriculture (USDA) said.

Friday’s USDA monthly export data showed March total U.S. beef exports at 234 million lbs., up 13.9 per cent from February and up 25.2 per cent from a year earlier.

CME feeder cattle dropped by its 4.500-cent limit following live cattle futures’ limit-down settlement. Monday’s feeder cattle limit will increase to 6.75 cents.

May and August feeders settled at 143.775 and 153.425 cents, respectively.

Hogs settle higher

This week’s firmer cash and pork cutout values landed CME May lean hogs above the 40-day moving average of 69.399 cents, said traders.

They said CME’s cattle market selloff and profit-taking capped May hog futures gains and weighed on the June contract.

Thinly-traded May closed 0.4 cent/lb. higher at 69.4 cents. Most actively traded June ended down 0.15 cent to 76.325 cents.

Packers raised bids for supplies five sessions in a row as supplies begin tapering off seasonally, said traders.

Spring barbecues, brisk U.S. pork exports and increased retail demand for Mother’s Day meals supported the pork cutout over the last six sessions, they said.

Friday’s USDA data showed March U.S. pork exports totaled 523.8 million lbs., up 16.3 per cent from February and up 15.6 per cent from a year ago.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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