LIVESTOCK-U.S. feeder cattle futures slump, but off session lows

Tue Feb 12, 2013 4:59pm EST

Related Topics

* Lower cash feeder cattle, live cattle selloff weigh
    * Live cattle futures drop on fund selling, cash values
    * Feb hogs gain; others fall with lower cash, corn prices

    By Theopolis Waters
    CHICAGO, Feb 12 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures slumped on Tuesday, weighed by lower
prices for feeder cattle in the most-watched Oklahoma City cash
market, analysts and traders said.
    They also cited active early-session selling in the
neighboring CME live cattle futures market.  
    Feedlots are beginning to feel the impact of significant    
losses after overpaying for younger cattle that are in short
supply, Doane Advisory Services economist Dan Vaught said.
    The U.S. cattle herd shrunk to the smallest in 61 years
after prolonged drought pushed feed costs to record highs last
summer. 
    Still, feeder cattle futures recovered some of their losses
as live cattle contracts floated up from morning lows.
    March and April feeder cattle attracted buyers after both
trading months sank to fresh contract lows of 141.800 and
145.625 cents, respectively.
    CME feeder cattle for March ended 1.550 cents per lb
lower at 143.250 cents. April closed at 147.150 cents,
down 1.475 cents.

    LIVE CATTLE SAG ON CASH PRICES
    Live cattle futures finished lower on fund liquidation and
disappointing early-week cash cattle returns, traders and
analysts said.
    A small number of cattle in the southern U.S. Plains traded
at $123 per cwt, down $2 from last week, feedlot sources said.
Sellers priced unsold cattle in the Plains from $125 to $127,
they said.
    "Cash prices have been pressuring the live cattle market.
And the inability of the cutout to gain consistent traction is
very disconcerting to the futures trader," Jim Robb, director of
the Livestock Marketing Information Center, said.
    Continued poor margins and seasonally tepid wholesale beef
demand are limiting how much packers are willing to spend for
supplies. 
    But bullish investors are betting that a decline in the
number of animals available for sale this week will mean cattle
left in feedlots fetch at least $125.
    The U.S. Department of Agriculture showed the price for
wholesale choice beef, or cutout, on Tuesday morning at $183.44
per cwt, up 72 cents from Monday; select cuts rose 52 cents to
$179.67.
    HedgersEdge.com put the average beef packer margin for
Tuesday at a negative $78.50 per head, compared with a negative 
$75.95 on Monday and a negative $69.70 on Feb. 5.    
    Spot February settled 0.825 cent per lb lower at
126.050 cents. The most-active April ended down 0.400
cent at 129.950 cents.
    
    MOST HOGS FALL ON CASH
    Spot February CME hog futures closed up 0.350 cent
per lb at 87.250 cents, drawing support from their discount to
CME's lean hog index at 90.17 cents.
    Other contracts retreated as packers lowered bids for cash
hogs to offset damage to their unprofitable margins, a trader
said.
    Deferred-month hog futures' premiums came into question as
corn prices continued to trend lower. That could slow the pace
of liquidation of the hog herd and later pressure cash prices.
    Most-active April ended at 86.000 cents, 0.375 cent
lower and June closed 0.525 cent down at 94.250 cents.  
    The average hog price at the most-watched Iowa/Minnesota
market on Tuesday morning was $81.52 per cwt, $1.45 lower than
on Monday, the USDA said.
    The average pork packer margin for Tuesday was a negative
$12.55 per head, compared with a negative $13.70 on Monday and a
negative $5.50 on Feb. 5, according to HedgersEdge.com.
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