* Feb futures weighed by potential cattle deliveries
* March feeders slip on cash prices, deferred months rise
* Feb hogs up with its discount to cash, others slide
By Theopolis Waters
CHICAGO, Feb 4 Aside from Chicago Mercantile
Exchange spot February live cattle futures, remaining contracts
drew support on Monday from last week's bullish biannual cattle
inventory report, analysts and traders said.
Friday's data showed tighter cattle numbers ahead with the
U.S. cattle herd at the smallest in 61 years after drought drove
feed costs to record highs last summer.
CME live cattle spot February settled down slightly
on cash cattle price caution.
Also, some traders exited the contract to avoid likely
deliveries. Monday was the first notice day for cattle
deliveries against the spot month that will expire on Feb. 28.
CME spot February live cattle closed at 127.075
cents per lb, down 0.025 cent. April ended up 0.100 cent
to 132.275 cents and June finished at 128.000 cents,
0.250 cent higher.
Investors wait for cattle in the cash market to change
hands. Cash cattle last week moved at mostly $122 to $124 per
cwt, feedlot sources said.
Wintry weather in the western Plains reduced the movement of
livestock to market, which is viewed as supportive for cash
Packers may curtail plant operations in the coming weeks to
get a grip on elusive margins and cushion the recent fall in
wholesale beef prices.
"The long-term cattle supply situation is positive for the
market. But shorter-term, we continue to have problems with beef
demand and margins are deep in the red," said U.S. Commodities
analyst Don Roose.
On Monday, packers slaughtered 115,000 head of cattle,
11,000 less than a week earlier and down 8,000 from the same
period a year ago, according to the U.S. Department of
USDA showed the price for wholesale choice beef Monday at
$182.74 per cwt, up 18 cents from Friday; select cuts gained 39
cents to $179.01.
HedgersEdge.com put the average beef packer margin for
Monday at a negative $86.95 per head, compared with a negative
$48.10 on Friday and a negative $33.55 on Jan. 28.
CME feeder cattle also closed mostly firm. March futures was
pressured by lower prices for cash feeder cattle in the
most-watched Oklahoma City market.
The tighter cattle supply outlook underpinned deferred
feeder cattle contracts.
March finished down 0.325 cent per lb at 148.875
cents. April closed up 0.275 cent to 152.400 cents and
May settled 0.500 cent higher at 155.200 cents.
MOST HOGS SLIDE
Spot February hogs settled up 0.425 cent per lb at
88.075 cents due to its close proximity to the CME's lean hog
index at 88.41 cents.
Remaining contracts sagged in anticipation of lower cash hog
prices as packers attempt to recover lost margins, said traders
Also, hogs that backed up on farms during last week's cold
snap are coming to market, which could further pressure cash
prices in the near term, a trader said.
The average hog price at the most-watched Iowa/Minnesota
market on Monday was at $87.78 per cwt, $1.39 lower than on
Friday, USDA said.
The average pork packer margin for Monday was a negative
$8.15 per head, compared with a negative $10.15 on Friday and a
negative $5.30 on Jan. 28, according to HedgersEdge.com.
Most-active April ended at 88.350 cents, 0.400 cent
lower, and June closed 0.400 cent lower at 97.100 cents.