Chicago Mercantile Exchange (CME) live cattle finished steady to weak on Thursday, weighed by futures’ premium to cash cattle prices, traders and analysts said.
So far, cash cattle in the U.S. Plains traded at $127 to $128 per hundredweight (cwt), steady to down $1 per from last week, said feedlot sources. Packer bids for unsold cattle stood at $126 against $130 asking prices, they said (all figures US$).
CME live cattle February closed unchanged at 131.55 cents per pound. April ended at 135.075 cents, down 0.275 cent.
"The reason we’re holding the big premiums is because of the tighter numbers ahead. It’s a real battle because of where cash is trading now," A+A Trading broker Jim Clarkson said.
Historic drought drove feed costs to all time highs last summer, forcing livestock producers to cull their herds, which is expected to result in fewer cattle and hogs this year.
Packers this week reduced slaughter rates to avoid raising bids for cattle, recapture lost margins and lift wholesale beef values.
USDA estimated Thursday cattle slaughter at 124,000 head, 4,000 last than a week earlier and during the same period a year ago.
HedgersEdge.com put the average beef packer margin for Thursday at a negative $66.75 per head, compared with a negative $67.10 on Wednesday and a negative $55.15 on Jan. 3.
The price for wholesale choice beef Thursday morning was $193.70/cwt, up 15 cents from Wednesday; select cuts rose 61 cents to $184.14, according to the U.S. Department of Agriculture.
Investors will monitor various USDA crop reports to be issued at 11 a.m CST on Friday. The data will have feed implications for livestock producers.
CME feeder cattle futures fell on weaker deferred-month live cattle contracts and steady to firmer corn prices.
Spot January ended 0.65 cent/lb. lower, at 150.85 cents. Most-actively traded March was 0.85 cent lower, at 152.925 cents.
Hogs mixed on spreads
Hog futures settled mixed on bullish spreads in anticipation for higher cash hog prices, despite unprofitable packer margins and lukewarm retail pork demand, analysts and traders said.
"We’re hearing that packers will need hogs with pork demand improving seasonally within the next few weeks," a trader said.
USDA Thursday morning showed the average hog price in the most-watched Iowa/Minnesota market fell 62 cents/cwt to $82.90, after rising $2.26 on Wednesday.
HedgersEdge.com put the average pork packer margin for Thursday at a negative $7.05 per head, compared with a negative $2.55 on Wednesday and a negative $7.05 on Jan. 3.
February hogs settled up 0.4 cent/lb., to 84.6 cents. April ended at 87.1 cents, down 0.225 cent.
— Theopolis Waters writes for Reuters from Chicago.