U.S. livestock: CME live cattle slump on fund selling, cash unease

Chicago | Reuters –– Chicago Mercantile Exchange live cattle fell on Wednesday, hit by cash price caution and fund liquidation after drifting below key technical levels, traders said.

Spot-August futures closed down 1.475 cents/lb. at 148.7 cents (all figures US$). October finished 2.55 cents lower at 146.6 cents, and under the 20-day moving average of 147.35 cents.

Futures adopted a bearish tone on the belief that more cattle are in the offing, especially if feed costs decline, a trader said.

Chicago Board of Trade corn futures tumbled following bigger-than-expected government corn and soybean harvest forecasts.

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Still, some live cattle traders see tight near-term supplies, positive packer margins and solid wholesale beef demand underpinning market-ready (cash) cattle prices later this week.

On Wednesday, cash bids surfaced in Kansas at $147/cwt against $153 asking prices, feedlots sources said. A week ago, cash cattle in the U.S. Plains fetched mainly $150 to $152.

Wednesday morning’s wholesale choice beef price jumped $2.97/cwt from Tuesday, to $243.90. Select cuts were up 67 cents, to $235.47, the U.S. Department of Agriculture said.

CME live cattle investors fretted that U.S. exports, including meat, to China could suffer after that country’s currency weakened against the U.S. dollar for a second day.

Live cattle market losses dropped CME feeder cattle futures, with August closing down 0.2 cent/lb. to 213.875.

Hogs gain as shorts cover

Bargain hunting and short-covering boosted CME lean hogs, traders said.

Spot-August futures closed up 1.125 cents/lb. at 77.85 cents, and most-active October 1.025 cents higher at 63.375.

Futures’ price discount to the exchange’s latest hog index at 78.79 cents furthered advances in the face of softer cash and wholesale pork values.

The average Wednesday morning price for cash hogs in Iowa/Minnesota had sagged $1.07/cwt in low volume from Tuesday, to $73.40, USDA said.

The morning’s wholesale pork price was at $89.45/cwt, $1.32 lower than on Tuesday, pressured by rib and pork bellies, USDA said.

Because of their low volume, midday cash prices can be “deceiving at times,” said AgFutures Managed Investments hog futures trader Tom Cawthorne.

And even though the pork cutout price has declined, packer margins remain profitable enough for them to pay more for hogs, he said.

Pork processor margins for Wednesday were at $27.25 per head, compared with $25.75 on Monday and $20.80 a week ago, as calculated by HedgersEdge.com.

– Theopolis Waters reports on livestock markets for Reuters from Chicago.

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