U.S. livestock: CME live cattle futures end mixed before USDA report

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled mixed on Friday on positioning before the U.S. Department of Agriculture’s monthly Cattle-On-Feed report.

Analysts expect the data at 2 p.m. CT to show fewer cattle were placed in feedyards last month due to sufficient pastures that allowed ranchers to fatten livestock longer outside of feedlots.

CLICK HERE to read the USDA Cattle-on-Feed report.

October live cattle closed up 0.025 cent per pound at 155.625 cents, and December down 0.225 cent at 158.7 cents (all figures US$).

Traders awaited prices for slaughter-ready, or cash cattle, that are expected lower given tepid wholesale beef demand and deteriorating packer margins.

Friday morning’s choice wholesale beef price slipped 34 cents per hundredweight (cwt) to $244.54. Select dropped $1.45 to $230.64, the USDA said.

Beef packer margins were a negative $70.05 per head, compared with a negative $66.70 on Thursday and a negative $13 a week ago, according to Colorado-based analytics firm HedgersEdge.com.

Cash cattle bids in Kansas are at $155 to $156 per hundredweight (cwt) and $154 to $155 in Nebraska, said feedlots sources. Sellers are asking up to $164 for their animals, they said.

Last week, cash cattle in the U.S. Plains sold at $161 to $162.

Packers look to shore up their sagging margins by cutting kills, a trader said. One plant will need fewer cattle after closing on Friday for scheduled maintenance, he said.

Packers on Friday processed 106,000 head of cattle, down 7,000 from last week, USDA said.

CME feeder cattle futures reached an all-time high, fuelled by lower corn prices and back-month live cattle market gains.

September closed 0.7 cent/lb. higher at 230.6 cents, and up 1.025 cents to 228.725 cents.

Hog futures finish strong

CME lean hogs closed higher supported by a trading strategy known as bull spreads, which consisted of investors who bought October futures and sold deferred contracts, traders said.

The bull spreads elevated the October beyond the 100-day moving average of 105.89 cents, which attracted buyers, they said.

December futures drew support from its discount to CME’s index at 104.74.

Investors await USDA’s afternoon hog price report to see if the October contract’s now modest premium to the exchange’s hog index is justified.

The government’s morning direct hog price data was unavailable. Cash hogs in the Midwest sold steady to 50 cents/cwt higher, according to hog dealers.

A few processors raised cash hog bids to top off this week’s production and for early next week, a trader said.

October closed up the maximum three cents per pound daily price limit at 105.975 cents, and December at 94.85 cents, up 1.05 cents.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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