LIVESTOCK-U.S. live cattle drop as USDA ups beef output forecast

Fri Feb 8, 2013 4:43pm EST

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* USDA raises 2013 U.S. beef output view by 290 mln lbs
    * Cash cattle trade steady, below expectations
    * Concerns for Northeast US beef demand amid snowstorm
    * Hogs retreat on weak pork prices, poor packer margins

    By Karl Plume
    CHICAGO, Feb 8 (Reuters) - Chicago Mercantile Exchange live
cattle futures tumbled on Friday after the U.S. Department of
Agriculture sharply raised its 2013 beef production forecast and
cash cattle traded at lower-than-expected prices, traders and
analysts said.
    Futures were further pressured by concerns that a severe
snowstorm in the heavily populated U.S. Northeast would hurt
beef demand.
    "USDA made a big 290-million-lb increase in beef production
and, on top of that, we have a snowstorm hitting our largest
demand center in the U.S. The higher supply and the potentially
short-term reduced demand lowered prices today," said Rich
Nelson, chief strategist with Allendale Inc.
    USDA, in a monthly supply-and-demand report on Friday,
raised its U.S. beef production forecast to 25.191 billion lbs,
up from 24.901 billion the previous month. The government's
total U.S. red meat and poultry output projection was increased
by 946 million lbs. 
    CME live cattle spot February settled 1.100 cent per
lb lower at 126.450 cents and the most-active April fell
1.400 cent to 130.125 cents. CME March feeder cattle 
plunged 2.200 cents to 145.000 per lb.
    The spot February contract slid as cash cattle at southern
Plains feedlot markets traded at mostly $125 per cwt, about
steady with last week but below the $126 to $127 that many
traders were expecting.
    Slumping beef prices kept pressure on packer margins, which
remained deep in the red at an estimated negative $61.45 per
head, versus a negative $48.10 per head a week ago, according to
livestock marketing advisory service HedgersEdge.com.
    Although beef prices were expected to begin firming
seasonally later this month, prices remained under pressure on
Friday.
    The U.S. Department of Agriculture quoted the wholesale
choice boxed beef cutout at $182.12 per cwt, down $1.34 from
Thursday. The select cutout fell $1.51 to $179.62 per cwt.
    Near-term beef demand was expected to take a hit as a
massive snowstorm moved into the heavily populated northeastern
United States on Friday. Restaurant traffic was expected to be
down as some areas could receive more than 2 feet of snow.
    
    HOGS RETREAT
    Lean hog futures resumed a recent downtrend amid weak pork
prices and poor packer margins.
    February hogs fell 0.525 cent to 86.450 cents per
lb. The spot contract remained at a wide discount to the latest
CME lean hog index price of 90.48 cents ahead of its expiration
next Thursday.
    Actively traded April hogs ended 0.400 cent lower at
86.125 per lb and June closed 0.100 lower at 94.500
cents.
    Cash pork prices edged higher on Friday but remained down
sharply on the week. USDA quoted the carcass cutout value at
$82.23 per cwt, up 54 cents from Thursday but down $4.58 from a
week ago.
    The average pork packer margin for Friday was a negative
$15.35 per head, compared with a negative $16.35 on Thursday and
a negative $10.15 a week earlier, according to HedgersEdge.com.
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