LIVESTOCK-U.S. live cattle futures, lean hogs end mixed

Thu Feb 7, 2013 4:54pm EST

Related Topics

* Technical selling weighs on cattle before midday recovery
    * Cattle gains limited by weak beef, poor margins
    * Hogs bounce after steep drop, but lower pork weighs

    By Karl Plume
    CHICAGO, Feb 7 (Reuters) - Chicago Mercantile Exchange live
cattle futures closed mixed on Thursday as early
technical-selling pressure faded, but the market remained
anchored by weak beef prices and poor packer margins, traders
and analysts said.
    Hopes for higher cash cattle prices in the southern Plains
this week supported the thinly traded spot contract, but bids
and offers in the cash market remained wide apart.
    "We filled a chart gap yesterday in the April live cattle
and technically they looked weak so we had some early technical
selling. But when that didn't follow through the market came
back," said Jim Clarkson, analyst at A&A Trading.
    "There isn't any really new fundamental news so we're just
jostling here. We've got big open interest in the April live
cattle and we're still waiting for cash to trade this week."
    Cash cattle bids at southern Plains feedlot markets were
around $123 per cwt on Thursday afternoon against offers of $127
to $128, traders said. Cattle traded last week at $122 to $124.
    Although beef prices were expected to begin firming
seasonally later this month, prices remained under pressure on
Thursday.
    The U.S. Department of Agriculture quoted the wholesale
choice boxed beef cutout at $183.46 per cwt, down 48 cents from
Wednesday and $1.86 from a week ago. The select cutout, however,
rose 48 cents to $181.13 per cwt, up 88 cents from a week ago.
    A severe snowstorm expected to hit the heavily populated
northeastern United States could blunt demand for beef as
restaurant traffic could slow, traders said.
    Estimated margins for U.S. beef companies fell to a negative
$65.70 per head on Thursday, versus a negative $26.25 per head a
week ago, according to Denver-based livestock marketing advisory
service HedgersEdge.com LLC.
    CME live cattle spot February settled 0.300 cent per
lb higher at 127.550 cents and the most-active April 
ended up 0.075 cent at 131.525 cents. Back-month contracts were
0.275 to 0.525 cent lower.
    CME March feeder cattle settled at 147.200 cents per
lb, down 0.350 cent.
    
    HOGS REBOUND
    Lean hog futures rebounded modestly from Wednesday's steep
declines, but weak pork prices and poor packer margins continued
to hang over the market, traders said.
    Investors were cautious ahead of Friday's monthly USDA grain
supply and demand report, which will offer price direction to
feed grain markets.
    "The market is coming out of a fairly steep correction and
we haven't had any severe weather that could impact production,"
said Sterling Smith, futures specialist with Citigroup.
    "Every hog in America is basically a four-legged corn and
soymeal processing plant so they're really watching that USDA
grain report. Nobody wants to be too aggressive ahead of that."
    February hogs settled up 0.075 cent per lb at 86.975
cents. The spot contract remained at a wide discount to the
latest CME lean hog index price of 89.92 cents ahead of its
expiration next Thursday.
    Most-active April ended at 86.525 cents, up 0.275, 
and June closed 0.200 higher at 93.450 cents.
    Cash pork prices slid lower again on Thursday, with the
carcass cutout value quoted by USDA at $81.69 per cwt. That was
down 72 cents from the previous day and $3.35 from a week ago.
    The average pork packer margin for Thursday was a negative
$16.35 per head, compared with a negative $13.75 on Wednesday
and a negative $5.20 on Jan. 31, according to HedgersEdge.com.
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