CHICAGO, Dec 17 (Reuters) – Chicago Mercantile Exchange livestock futures turned lower on Wednesday, as hog traders sought profits from the recent price rally and investors shed some of their long cattle positions ahead of the holidays, market analysts said.
Strength in the Chicago corn futures market weighed on feeder cattle futures during the session, as did a drop in wholesale beef prices, market analysts said.
On Wednesday morning, the U.S. Department of Agriculture priced choice cuts of beef at $356.92 per hundredweight (cwt), down $1.96 from Tuesday. Select cuts dropped 26 cents to $348.84 per cwt.
Tight cattle supplies and chilly weather in the U.S. mid-section continued to underpin the market, traders said. But some traders and market analysts said they were waiting for data updates from the USDA’s Cattle on Feed report on Friday in order to get a better idea of how many animals are available in the supply chain for processing.
In a Reuters poll of market analysts, the number of cattle placed in feedlots was down in November somewhere between 4% to 15.6% – a surprisingly wide range and a sign of market uncertainty after the data blackout during the 43-day federal government shutdown this fall, said Dan Norcini, an independent livestock analyst.
“We know the supplies are small, how really – how small are they?” Norcini said.
Meanwhile, beef packer margins continued to slide sharply lower in the red. Denver-based livestock marketing advisory service HedgersEdge.com calculated that beef packers were losing $140.75 per head of cattle as of Wednesday – compared to a loss of $9.45 per head a week earlier.
Whether cash markets will see prices continue to rise or slip in the coming days depends on whether meat packers are finding themselves needing last-minute supplies going into a shorter production week ahead of Christmas, Norcini said. “They’re just not going to pay up for cattle if the demand side isn’t strong.”
CME February live cattle settled down 1.150 cents at 299.55 cents per pound. January feeder cattle ended 1.800 cents lower at 341.525 cents per pound, while March feeders settled down 1.275 cents at 336.325 cents per pound.
Meanwhile, CME benchmark February lean hog futures settled 1.775 cents lower at 83.000 cents per pound.
Wholesale pork cutout prices also dropped lower, an indication that consumer demand for different cuts of pork may not be as strong as some investors had hoped, said market analysts. USDA reported that pork carcasses were priced at $97.62 per cwt, down 94 cents from Tuesday, with both bellies and ham prices falling, too. (Reporting by P.J. Huffstutter; Editing by Shailesh Kuber)
