* Poor packer profit margins weigh on cattle
* Strong stopping of deliveries underpins Feb
* Hog futures falter due to falling product prices
By Sam Nelson
CHICAGO, Feb 6 Chicago Mercantile Exchange (CME)
live cattle futures contracts were lower on Wednesday on poor
profit margins for packers and feeders while hog futures also
dropped on falling pork product prices, analysts and traders
"Technically, cattle are weak and the April contract is
holding a huge premium to cash," said Jim Clarkson, analyst for
Spot February, which is in delivery and thinly traded, ended
weak but gained on spreads with other contracts due to strong
stopping of deliveries and expectations of a steady to firm cash
cattle market later this week.
"The 17 deliveries were all retenders. There were no new
deliveries and there was a strong stopper again, so that's a
good indication the cash market could be up this week," said
Dennis Smith, a broker for Archer Financial.
Also, there are indications boxed beef may be bottoming out
"which has some in the trade scratching their head." he said.
USDA late on Tuesday reported choice wholesale beef
carcasses at $184.31 per cwt, up $1.57, and select at $179.72,
CME February cattle was down 0.350 cent per lb at
127.250 cents per lb. April was down 0.850 cent per lb
at 131.450 cents per lb.
Hedgersedge reported the packer margin for beef at a
negative 62.10 versus a negative 69.70 on Tuesday and a negative
27.50 a week ago.
Feeder cattle futures also were lower despite a sliding corn
futures market which usually supports feeder cattle, due to the
implications for lower costs to feed cattle.
"Feeders are down because cattle feeders are losing a lot of
money," Clarkson said.
CME March feeder cattle were down 0.975 cent per lb
at 147.550 cents per lb and April was down 1.100 cents
per lb at 150.925 cents per lb.
FALLING PORK PRODUCT MARKET HITS FUTURES
CME February hog futures was down 1.425 cents per lb
at 86.900 cents per lb and April was down 1.450 at
"Product is in trouble, it's weaker, so I think everyone was
just getting out of the way," a CME floor broker said.
USDA late on Tuesday reported wholesale loins unevenly
steady, hams $2 per cwt lower and bellies $10 lower.
Trading was moderate, with mostly light demand and moderate
to heavy offerings.
"Cash hogs were OK but I think with the product being down,
they're afraid hogs on the hoof might come down too," the broker
Cash hogs around the U.S. Midwest traded steady to 50 cents
per cwt higher on Wednesday, with the supply expected to tighten
from here, dealers said.
Hedgersedge reported the packer margin for pork at a
negative 13.75 versus a negative 5.50 on Tuesday and a positive
1.35 a week ago.
"All of a sudden product has a problem, so that's taking hog
(futures) down," Clarkson said.