U.S. livestock: Supply growth worries extend CME live cattle losses

Chicago | Reuters — Chicago Mercantile Exchange live cattle finished lower for a second consecutive day on Tuesday amid concerns about increased supplies ahead, said traders.

“Everybody keeps talking about this wall of cattle coming. But, feedyards moved a lot of cattle ahead of schedule to avoid lower prices later, which may ultimately create a hole in supplies,” a Plains feedlot manager said.

Futures were undervalued compared to this week’s cash price outlook, which limited market losses and briefly lifted contracts into positive trading territory.

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June live cattle closed down 0.275 cent/lb. at 105.825 cents, and August ended 0.45 cent lower at 104.075 (all figures US$).

On Tuesday a small number of slaughter-ready, or cash, cattle in the U.S. Plains sold for $118/cwt, down from mostly $124 there last week. Other cattle in the state are priced at $126, said feedlot sources.

A week ago, overall cash cattle in the Plains brought $118-$126.50.

Investors await Wednesday’s Fed Cattle Exchange auction of 2,982 animals.

Market bulls look for steady-to-higher cash returns this week given impressive packer margins and rising wholesale beef values at the start of May National Beef Month.

Bearish traders contend that packers might resist paying more for cattle knowing a supply buildup is looming.

A walkout over a pay shift differential at a Cargill beef processing plant partially disrupted production at the Nebraska facility, a company spokesman said on Tuesday.

Lower live cattle futures and technical selling sank CME feeder cattle. The contract drew more pressure from higher corn prices that tends to increase input costs for feedlots.

May closed 2.275 cents/lb. lower at 137.9 cents.

Hogs finish higher

Firmer cash hog and wholesale pork prices lifted CME hog futures, said traders.

A few traders bought hog futures and simultaneously sold live cattle contracts, they said.

May closed up 1.15 cents/lb. at 67.45 cents. Most actively traded June ended up 1.2 cents at 73.9 cents.

Farmers actively planted corn and soybeans which slowed hog supplies in parts of the Midwest, said traders and analysts.

Grocers are advertising pork as warmer spring weather enters parts of the country, stirring interest in cooking outdoors, a trader said.

“The return of more spring-like temperatures across most of the nation should finally kick start the pork demand train especially with Mother’s Day and then Memorial Day fast approaching,” said independent livestock futures trader Dan Norcini.

— Reporting for Reuters by Theopolis Waters in Chicago.

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