Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled lower on Tuesday, weighed by caution ahead of this week’s cash prices, said traders.
They said sell stops and technical selling contributed to market losses.
February live cattle closed 0.575 cents/lb. lower at 119.675 cents (all figures US$). April finished 0.775 cent lower at 118.4 cents, and beneath the 10-day moving average of 118.58 cents.
Slaughter-ready, or cash, cattle bids in the southern U.S. Plains surfaced at $124 to $125/cwt versus up to $125 asking prices. Cash cattle last week in the Plains brought mostly $121 to $123.
Market participants await Wednesday morning’s sale of roughly 5,500 head at the Fed Cattle Exchange where animals there last week, on average, fetched $120.50/cwt.
Packers may avoid paying more for supplies by cutting slaughter rates, which could help improve their margins and underpin wholesale beef prices, said traders.
But, they said, some packers bidding for cattle on a Tuesday rather than later in the week suggest they may be short of inventory.
Tuesday morning’s choice wholesale beef price rose $1.50/cwt from Monday to $193.27. Select cuts surged $2.36 to $189.19, the U.S. Department of Agriculture said.
Tuesday’s USDA monthly cold storage report showed total December beef stocks at 567 million lbs., a record high for any month.
Large beef inventories in recent months continued into December, partly due to the substantial increase in boneless beef items and a huge surge in fourth-quarter beef production, said independent market analyst Bob Brown.
Weaker CME live cattle futures pressured the exchange’s feeder cattle contracts.
January feeders, which will expire on Jan. 26, ended down 0.35 cent/lb. to 132.425 cents. Most actively traded March closed 0.5 cent lower at 130.175 cents.
Hog futures uneven
CME February lean hogs were supported by its discount to the exchange’s hog index for Jan. 20 at 67.03 cents, said traders.
They said April futures’ premium to the hog index discouraged buyers.
February hogs ended up 0.225 cent/lb. to 65.225 cents, and April down 0.15 cent to 67.625 cents.
USDA’s cold storage data put total December pork inventories at 477.2 million pounds, down 13 per cent from November and down seven per cent from a year earlier.
December pork belly stocks had fallen 54 per cent year-over-year, a record low for the month.
Brown attributed the total pork decline to brisk U.S. exports and persistently strong bacon demand.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.