Chicago | Reuters — Chicago Mercantile Exchange live cattle futures slumped to fresh contract lows on Wednesday, and October dropped by the three-cent-per-pound daily price limit, on liquidation ahead of possibly lower cash prices later this week, traders said.
Spot-October closed at 137.6 cents, its new contract low (all figures US$). December ended at 139.475 cents, down 2.7 cents after marking a new low of 139.3.
CME’s live cattle trading limit will be expanded to 4.5 cents on Thursday following October future’s limit-down settlement.
“For the cattle, this is stand back and hope for the best because there is a lot of fear and emotion in this thing right now,” Schwieterman Inc. broker Domenic Varricchio said.
On Wednesday morning, market-ready (cash) cattle bids surfaced in Kansas at $136/cwt, against sellers there and Texas asking as much as $143, feedlot sources said. Last week, cash cattle in the U.S. Plains sold at $139-$142.
Processors will continue to penalize feedlots for heavyweight cattle despite profitable packer margins, the day’s beef cutout uptick and 16,000 fewer animals for sale this week, a trader said.
Wednesday morning’s wholesale choice beef price (cutout) was up 25 cents/cwt, to $233.74, from Tuesday. Select cuts rose $1.12, to $226.13, the U.S. Department of Agriculture said.
Potential cash price weakness stirred bear spreading that consisted of investors that sold the October contract and simultaneously bought deferred months.
Investors await USDA’s release of the monthly Cattle-On-Feed report on Friday.
Live cattle futures losses sent CME feeder cattle to new contract lows. September finished 4.2 cents/lb. lower at 194.125 after earlier posting a new contract low of 193.9 cents.
Hog futures slide
CME lean hogs were pressured by talk that packers may soon lower cash bids after shoring up inventory for Saturday’s slaughter, traders said.
Spot October ended down 1.125 cents/lb. at 68.25, and December 1.775 cents lower at 62.075.
The morning cash prices in the Midwest region sold mostly $1/cwt higher, according to regional hog dealers.
However, some investors believe profitable margins and grocers buying for National Pork Month in October will underpin cash prices in the near term.
Wednesday morning’s wholesale pork price was up seven cents/cwt from Tuesday, to $84.04, according to USDA.
Fund liquidation and jitters before the government’s quarterly hog report on Sept. 25 exerted more pressure on futures.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.