Chicago Mercantile Exchange (CME) live cattle futures on Friday sustained their biggest daily per cent loss, 1.8 per cent, in 5-1/2 months on weaker cash cattle prices, analysts and traders said.
CME live cattle losses mounted after wholesale beef prices drifted lower.
“What’s really spilled over into the cattle today was the softness in the wholesale beef market,” Livestock Marketing Information Center director Jim Robb said.
Analysts said grocers and restaurateurs are resisting buying beef at higher prices as consumers cope with the government’s payroll tax hike and higher gasoline prices.
Cash cattle in Texas and Kansas brought mostly $127 per hundredweight (cwt), down $1 from last week (all figures US$).
U.S. Department of Agriculture data late Friday quoted wholesale choice beef at $195.76/cwt. It was down 56 cents from Thursday and off from its $197.65 peak this week.
Select cuts dropped $1.20, to $193.93, after hitting a record high of $196.73 on Tuesday, according to USDA.
The surge wholesale beef values, prior to Thursday, and steady-lower cash prices landed packer margins in double-digits for the first time since early September.
HedgersEdge.com calculated U.S. beef packer margins on Friday at a positive $10.50 per head versus a positive $5.45 on Thursday and a positive $3.85 a week ago.
Live cattle futures were down 1.4 per cent for the week.
April live cattle closed at 125.775 cents/lb., 2.275 cent lower.
June was 1.85 cents lower at 121.3 cents. It earlier sank to a fresh contract low of 121.2 cents in after-hours trading.
CME feeder cattle slumped to a 7-1/2 month low for a second straight day, with all contracts posting new lows, pulled down by the lower cattle market.
Feeder cattle futures for the week fell 1.7 per cent.
Spot March feeders settled 1.6 cents/lb. lower at 136.675 cents and hit a fresh contract low of 136.65 in after-hours trading.
Most-actively traded April ended at 139.1 cents, 2.45 cents lower. It marked a new contract low of 139.075.
Futures’ premiums weigh
CME hogs’ premiums to the exchange’s lean hog index at 77.37 cents motivated sellers, a trader said.
Futures shed 2.9 percent of their value this week pressured by uneasiness about near-term cash hog prices. Investors cited disappointing wholesale pork demand and ample supplies.
“The pork export pace is slow, forcing the industry to rely on domestic demand. And, hog numbers are a bit larger than a year ago,” said U.S. Commodities analyst Don Roose.
The average price for pork at wholesale Friday evening was pegged at $79.05/cwt, up $1.51 after being down 90 cents on Thursday.
USDA data on Friday showed the average hog price in the most-watched Iowa/Minnesota market at $73.07, $1.46 lower than Thursday.
Packers this week slaughtered an estimated 2.203 million hogs, 2,000 more than a week ago and up 24,000 from last year.
April hogs closed at 79.675 cents per lb, down 1.2 cents. June was 1.2 cents lower at 89.325 cents.
— Theopolis Waters writes for Reuters from Chicago.