Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures ended their three-day rally Friday on profit-taking and the downturn in wholesale beef prices after Thursday’s spike to a record high, traders and analysts said.
June and August closed 1.275 cents per pound lower at 152.525 cents and 150.8 cents, respectively (all figures US$).
Friday morning’s choice wholesale beef (cutout) price slumped $2.05 per hundredweight (cwt) from Thursday to $262.69. Select cuts fell 79 cents, to $250.52, the U.S. Department of Agriculture said.
Retailers likely bought enough beef for the weekend and will book product hand-to-mouth as the U.S. Memorial Day holiday (May 25) approaches, traders and analysts said.
Investors sold futures in anticipation of packers paying the same or less than last week for cash cattle based on Friday’s futures selloff, beef cutout setback and more cattle for sale.
Still, futures finished up from session lows buoyed by their discounts to recent cash prices.
Market-ready (cash) cattle bids in the U.S. Plains stood at $157-$160/cwt versus up to $164 asking prices, industry sources said. A week ago, cash cattle moved at $161-$164.
A $160 cash trade is possible this week which would be lower than last week, but still $8 above the June contract, said Lane Broadbent, president of KIS Futures Inc.
June futures led losers after investors sold it and simultaneously bought deferred months in a trading strategy known as bear spreads.
CME feeder cattle posted losses for the first time in seven sessions, pressured by profit-taking and live cattle market selling.
May closed down 0.25 cent/lb. to 219 cents, and August 0.55 cents lower at 218.4 cents.
Hog futures sag
CME lean hogs ended lower on profit-taking and spillover live cattle market pressure, traders said.
Fund liquidation developed after June and July drifted below their respective 10-day moving averages of 83.83 cents and 83.96 cents.
June closed 0.6 cent lower at 83.35 cents, and July down 0.725 cent, to 83.925 cents.
Some traders worried that packers may soon curb slaughters after higher hog prices and softer wholesale pork values hurt their margins.
USDA reported Friday morning’s average cash hog price in Iowa/Minnesota jumped $1.58/cwt from Thursday, to $81.83.
Separate government data quoted the morning’s wholesale pork price at $83.56/cwt, 81 cents lower than Thursday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.