February 14, 2013 / 9:45 PM / 5 years ago

LIVESTOCK-US feeder cattle futures rally from six-month low

* Weaker corn, short covering lend futures support
    * Feeders' climb lifts live cattle from session lows
    * Feb hogs firm into expiration, others fall on cash

    By Theopolis Waters
    CHICAGO, Feb 14 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures closed higher on Thursday, as they bounced
back from a six-month low earlier in the day on technical buying
and later short-covering, traders and analysts said.
    Traders and analysts attributed the rebound to weaker prices
for corn that could help reduce input costs for feedlot
    Early-session losses dropped CME's feeder cattle 
Relative Strength Index (RSI) to 27.71. A market is considered
technically oversold with an RSI below 30.
    "This thing was oversold and needed a good bounce," said
R.J. O'Brien floor manager James Brooks.
    March ended 1.325 cents per lb higher at 142.675
cents. April closed at 146.225 cents, up 1.275 cents.
Both contracts recovered after tumbling to  contract lows of
139.175 and 143.075 cents, respectively.
    The market's recovery on Thursday halted an eight-day skid
caused by the lower live cattle market and extremely poor
feedlot margins that reduced demand for younger cattle.
    CME live cattle finished higher amid short-covering after
feeder cattle futures erased morning losses, analysts and
traders said.
    Live cattle market advances beat back initial selling tied
to lower cash cattle prices. Lukewarm domestic beef demand and
disappointing exports also pressured futures at the start.
    Cash cattle sales appear to be done for the week at $123 per
cwt, $2 lower than a week ago, feedlot sources said.
    Despite the number of cattle available for sale being down
17,000 head from last week, increased cattle weights suggest
producers were not current in moving cattle to market, said KIS
Futures Vice President Lane Broadbent. 
    U.S. Department of Agriculture data showed beef exports last
week at a net 7,300 tonnes, mostly to Canada, compared with
9,700 tonnes the previous week. 
    USDA put the wholesale price for choice beef on Thursday at
$183.53 per cwt, down 15 cents from Wednesday; select cuts
gained 28 cents to $179.60.
    Packers avoided spending more for cattle by trimming
slaughter rates, which could help improve their margins and
boost wholesale beef values.
    From Monday to Thursday, packers slaughtered 472,000 head of
cattle, down 4,000 from a week earlier and 10,000 less than a
year ago.
    A few packing plants will be idle on Monday for the
Presidents' Day holiday. An estimated 104,000 cattle were
processed during the holiday a year ago, according to USDA.
    HedgersEdge.com put the average beef packer margin for
Thursday at a negative $69.25 per head, compared with a negative
$73.95 on Wednesday and a negative $65.70 on Feb. 7. 
    CME spot February hogs, which expired at noon CST,
settled up 0.200 cent per lb at 87.675 cents. It finished at a
modest discount to CME's lean hog index at 88.96 cents.
    Lower cash hog bids and sluggish wholesale pork demand
pressured remaining hog futures contracts, analysts and traders
    April, the new lead contract, ended at 84.325 cents,
down 1.475 cents. June closed down 1.450 cents to 92.700
    Pork plants are less eager to buy hogs at higher prices
given their unprofitable margins and inability to move fresh
pork, despite expectations for increased ham demand for Easter.
    "Demand is killing everything," said independent hog futures
trader Bill Cipolla.
    USDA showed the average price for hogs in the most-watched
Iowa/Minnesota market Thursday at $82.48 per cwt, $1.54 lower
than on Wednesday.
    The average pork packer margin for Thursday was a negative
$16 per head, compared with a negative $9.50 on Wednesday and a
negative $16.35 on Feb. 7, said HedgersEdge.com.
    Packers processed 1.678 million hogs from Monday to
Thursday, 2,000 less than a week earlier and 4,000 fewer than
for the same period a year ago, according to USDA.
    Monday's holiday could reduce that day's hog slaughter by
about 50,000 head, an industry analyst said.
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