Cattle futures recoil from highs as packer losses deepen - CME
Lean hog futures end lower
5 December 2024
2 minute read
By: Chicago Mercantile Exchange (CME) live and feeder cattle futures dropped on Wednesday in a technical and profit-taking retreat following recent strong gains and as beef packer margins fell deeper in the red, Reuters reported, citing analysts.
Losses in both markets, however, were tempered by firm cash markets and tight supplies of cattle, they said.
"We were up at some fairly high levels so profit taking is coming in. But the live cattle losses are limited by the fact that the tone in the Plains cash market remains pretty firm," said Doug Houghton, analyst at Brock Associates.
"The beef cutout values have also weakened and the packer operating margins are dropping farther into the red," he said.
CME February live cattle fell 0.750 cent to 188.325 cents per pound. January feeder cattle ceded 2.350 cents to end at 256.950 cents per pound.
Feedlots in the US Plains are hoping to score another week of stronger cash cattle prices this week after values jumped by about $3 last week to $190 per cwt. Cattle were offered at $192 to $194 per cwt this week, traders said.
But packer losses have deepened to an estimated $69.95 per head on Wednesday, according to marketing advisory service HedgersEdge, down from losses of $22.00 per head a week ago.
Meanwhile, the choice boxed beef cutout dropped to $308.33 per cwt on Wednesday afternoon, down $2.50 from the prior day, the US Department of Agriculture said.
Lean hog futures were also lower as funds, which have built up a large net long position in hogs, liquidated longs and pocketed profits following the market's recent run to contract highs.
CME February hogs ended 1.500 cents lower at 86.350 cents per pound after testing technical chart support at its 20-day moving average.
