Reuters: CME live cattle braces for possible lower cash prices

Chicago Mercantile Exchange live cattle futures sagged on Monday in advance of potentially lower cash prices this week as packers attempt to recover lost profits, said traders.

February live cattle closed down 0.475 cent per pound at 115.925 cents, and April was 0.625 cent lower at 112.525 cents.

Monday’s average beef packer margins were at a negative $81.80 per head, down from negative $75.10 on Friday and a negative $59.75 a week ago, as calculated by HedgersEdge.com.

Last week, slaughter-ready, or cash, cattle in the U.S. Plains brought $119 to $120.50, steady to $1.50 higher than in the previous week.

Investors await Wednesday’s Fed Cattle Exchange sale of about 4,800 animals that last week, on average, brought $117.50.

Some processors have already scaled back production to rein in cash spending, said analysts and traders.

Reduced slaughter rates typically help improve packer margins and stimulate beef buying interest from grocers to avoid possible inventory shortages of meat.

The morning’s choice wholesale beef price was up 51 cents per cwt to $188.14 from Friday. Select cuts climbed $1.39 to $187.04, the U.S. Department of Agriculture said.

Fund selling and slumping live cattle futures weighed on CME feeder cattle contracts. March feeders closed down 0.250 cent per pound to 121.825 cents.

Source: Reuters