U.S. livestock: CME live cattle rise on discounts to cash prices

Chicago | Reuters –– Chicago Mercantile Exchange live cattle contracts gained modestly on Thursday, with help from short-covering stirred by future’s discounts to cash prices, traders said.

April live cattle ended up 0.35 cent/lb. at 132.425 cents, and June closed 0.375 cent higher at 122.225 cents (all figures US$).

So far this week, packers in the southern Plains paid $132-$134/cwt, compared with mostly $133 there last week, said feedlot sources.

On Thursday, a small number of cash cattle in Nebraska moved at $135-$136/cwt, generally steady with last week’s sales in the state, they said.

Some processors bought cattle for delivery in two weeks, but others needed to fill inventories for immediate production, a trader said.

Packers were cautious about cash spending given their unprofitable margins, seasonally slack wholesale beef demand and more animals for sale than last week, traders and analysts said.

The average beef packer margin on Thursday was estimated at a negative $45 per head, down from a negative $37.80 on Wednesday and a negative $38.95 a week ago, as calculated by HedgersEdge.com.

The morning’s wholesale choice beef price slumped $1.37 per from Wednesday, to $215.04. Select cuts dropped 21 cents, to $207.22, the U.S. Department of Agriculture said.

Market fundamentals influenced live cattle futures less than the attempt by algorithm traders to move the market around, said Linn Group analyst John Ginzel.

April feeder cattle closed 0.975 cent/lb. higher at 154.15 cents, May ended down 0.3 cent, to 149.8 cents, and August settled up 0.175 cent, to 151.375 cents.

CME feeder cattle futures were supported by their price discounts to the exchange’s feeder cattle index for April 6 at 158.62 cents.

Firm corn prices capped futures advances and weakened the May feeder cattle contract.

Generally firm hog futures

Investors bought deferred CME lean hog months and at the same time sold April futures ahead of their April 14 expiration, traders said.

They said cash price uncertainty and soft wholesale pork values further pressured the April hog contract.

Packers on Thursday slaughtered 377,000 hogs, down 60,000 from last week, based on USDA estimates.

An eastern corn belt processor and a central Midwest packing plant may have shut down on Thursday for equipment upgrades, regional hog dealers and traders said.

April closed down 0.375 cent/lb., to 67.125 cents. May ended 0.175 cent higher at 75.925 cents and June finished up 0.1 cent to 80.075 cents.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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