Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed mixed on Friday after a choppy session swayed by pre-weekend positioning and investors digesting this week’s lower cash prices, traders said.
August closed up 0.15 cent/lb. at 146.65 cents, and October down 0.3 cent at 149.125 cents (all figures US$).
On Friday, market-ready (cash) cattle in the U.S. Plains sold at $148/cwt, $2 to $3 lower than last week, feedlot sources said.
August futures were supported by their discount to cash prices, while October was moderately overpriced to cash, a trader said.
More week-over-week cattle numbers and seasonally slack wholesale beef demand, which eroded packer profit-margins, conspired against cash values and CME’s live cattle market.
“The boxed beef has been in a meltdown, and is really pressuring the futures,” said Top Third Ag Marketing analyst Craig VanDyke.
Friday morning’s wholesale choice beef price, or boxed beef cutout, was at $233.31/cwt, its lowest level since $231.87 on June 16, 2014. Select cuts were at $229.68, down $1.14 from Thursday, the U.S. Department of Agriculture said.
Investors will monitor forecasts next week for extreme heat in the Plains that might prompt some feedlots to move cattle to packers sooner than expected to avoid heat stress to animals.
Meanwhile, a few packers have already cut slaughters to stabilize their sliding margins and prop up sagging wholesale beef values.
Fallen corn prices and modest back-month live cattle market gains drove up CME feeder cattle contracts.
August closed 0.725 cent/lb. higher at 215.2 cents.
Hogs ease with fundamentals
CME lean hogs ended lower, responding to slumping cash prices and the pullback in wholesale pork values, traders said.
August ended 0.325 cent/lb. lower at 75.675 cents, and October 1.075 cents lower at 63.45 cents.
The average price of cash hogs in Iowa/Minnesota on Friday dropped for a fourth straight day to $74.57/cwt, $1.58 lower than on Thursday, USDA said.
USDA data showed the morning’s wholesale pork price at $81.67/cwt, down 98 cents from Thursday pressured by $3.20 lower pork bellies.
Hog numbers are sufficient enough for packers not to compete for them, and grocers are buying pork hand-to-mouth given plentiful supplies, an analyst said.
This week, the industry is on track to process 2.09 million hogs, including 32,000-head on Saturday, which would be 17,000 more than last week, according to government estimates.
— Theopolis Waters reports on livestock markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer.