Source: Theopolis Waters, The Western Producer, April 12, 2016
CHICAGO, April 12 (Reuters) – Chicago Mercantile Exchange live cattle futures extended Monday’s losses into Tuesday on more profit-taking and technical selling, traders said.
April live cattle ended 0.550 cent per lb lower at 133.525 cents, and beneath the 100-day moving average of 133.68 cents. June closed 0.375 cent lower at 122.850 cents.
Futures declined despite the possibility that packers short on inventory might pay more later this week for market-ready, or cash, cattle as beef demand improves for spring cookouts.
But some packers may curb cash spending given their negative margins and more than 19,000 head of cattle for sale than last week.
“Warming temperatures could and should stimulate beef buying. However, we’re a little concerned that now is the time of year where (more) supplies start to offset increased demand,” said Allendale Inc chief strategist Rich Nelson.
Last week, packers in the U.S. Plains paid $132 to $136 per cwt.
The average beef packer margin on Tuesday was estimated at a negative $47.25 per head, up from a negative $62.35 on Monday and a negative $47.00 a week ago, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price surged $2.50 per cwt from Monday, to $218.95. Select cuts climbed $2.14 to 209.19, the U.S. Department of Agriculture said.
Fallen live cattle futures and weaker cash feeder cattle prices weighed on CME feeder cattle contracts. April closed down 0.275 cent per lb to 155.275 cents.
Most CME lean hog contracts slipped on their premiums to the exchange’s hog index for April 8 at 66.52 cents, traders said.
They said April futures tracked the hog index as the contract prepares to expire on Thursday.
April closed up 0.250 cent per lb to 66.600 cents, May ended down 0.300 cents per lb to 75.100 cents and June finished 0.425 cent lower at 79.200.
The lack of concise cash and pork price direction kept fundamental traders on the defensive.
Government data on Tuesday showed the morning average cash hog price in the western Midwest down 25 cents per cwt from Monday in light volume to $62.95.
Tuesday morning’s wholesale pork price was 49 cents per cwt higher than on Monday at $77.66, the USDA said.