U.S. livestock: CME live cattle sag despite fundamentals

Chicago | Reuters — Chicago Mercantile Exchange live cattle nearby contracts on Wednesday were weakened by funds that sold, or “rolled,” June positions into back months ahead of similar moves early next week, said traders.

Nearby market losses trumped futures’ bullish discount to cash prices, strong wholesale beef values and triple-digit beef packer profits.

June live cattle closed 0.975 cent/lb. lower at 104.85, and August ended down 0.1 cent at 103.975 cents (all figures US$).

Almost 400 of the nearly 3,000 head of cattle at Wednesday’s Fed Cattle Exchange brought mostly $122.50/cwt.

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A few slaughter-ready, or cash, cattle in Kansas on Tuesday fetched $118 versus $124 a week ago. Other cattle there and in Texas are priced at $126.

The bulk of last week’s cash cattle sales in the Plains were $118-$126.50.

“Everything is flowing in a very positive manner. It’s hard to get extremely negative when you’ve got everybody in the top end of the supply chain making a lot of money,” said West Oak Commodities analyst Tom Tippens.

Packer margins remain strong as beef demand picks up for spring grilling, May National Beef Month and retail preparation for the U.S. Memorial Day holiday, he said.

Cargill’s Schuyler, Neb. beef processing plant resumed normal operations after Tuesday’s labour dispute, a company spokesman said on Wednesday.

Short-covering, steady-to-firmer cash feeder cattle prices and higher back-month CME live cattle futures boosted the exchange’s feeder cattle contracts.

May closed up 0.725 cent/lb. at 138.625 cents.

Hogs end weaker

CME lean hogs dropped on profit-taking following the morning’s cash price retreat, said traders.

They said some investors were put off by futures’ sizable premiums to the exchange’s hog index for April 30 at 62.45 cents.

May closed 0.55 cent/lb. lower at 66.9 cents. Most actively traded June ended down 0.4 cent at 73.5 cents.

Some processors have enough hogs through the rest of the week, a trader said. Packers may bid up for hogs in areas where spring planting has taken priority over moving pigs to market, he said.

Wholesale pork values gained for a fourth straight session, fueled by spring cook outs and higher pork belly prices leading into the summer bacon-lettuce-tomato sandwich season, the trader said.

— Reporting for Reuters by Theopolis Waters.

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