U.S. livestock: Fund liquidation undercuts CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Friday, hit by sell stops and fund selling after drifting below technical support levels, said traders.

February live cattle closed 1.25 cents/lb. lower at 116.4 cents, and April 1.675 cents lower at 113.15 cents (all figures US$).

Both contracts slipped beneath their respective 10-day moving averages of 116.605 and 114.865 cents.

Jitters about next week’s slaughter-ready, or cash, cattle prices exerted more pressure on futures. Some packers have already scaled back production to recoup lost margins and improve beef cutout values.

This week, cash cattle in the U.S. Plains traded at $119-$120.50/cwt, steady to $1.50 higher than last week.

The U.S. Department of Agriculture estimated this week’s cattle slaughter at 574,000 head, 19,000 fewer than last week and down 27,000 from a year earlier.

Friday’s average beef packer margins were at a negative $75.10 per head, down from negative $69.20 on Thursday and a negative $57.05 a week ago, as calculated by HedgersEdge.com.

The morning’s choice wholesale beef price was down 67 cents/cwt to $188.04 from Thursday. Select cuts rose 74 cents to $186.56, USDA said.

Technical selling, higher corn prices and lower live cattle futures sank CME feeder cattle contracts.

March feeders closed 1.55 cents/lb. lower at 122.075 cents.

Higher hog futures settlement

Firmer wholesale pork values, anticipation for steady-to-higher cash prices and back-month bargain buying drove up CME lean hogs, said traders.

February hogs ended up 0.325 cent/lb. to 74.55 cents, and notched a fresh contract high of 74.975 cents. Most actively traded April closed up 0.3 cent to 71.075 cents.

Friday morning’s cash prices in the U.S. Midwest were steady to firmer, according to regional hog merchants.

U.S. government data on Friday morning showed the average wholesale pork price up 36 cents/cwt to $85.09 from Thursday, with price increases for all categories listed except pork bellies.

Some packers filled inventories into early next week but could use a few pigs afterwards, an Iowa hog merchant said.

Domenic Varricchio, a broker with Schwieterman Inc., said cash prices remain solid and overall pork demand is holding up, despite the pullback in pork belly values.

“They’re (packers) still making money hand over fist, so I believe they want to process all the hogs they can get their hands on,” said Varricchio.

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

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