CME feeder cattle sinks 4.5-cent limit as corn prices jumpCHICAGO - Lightly traded Chicago Mercantile Exchange feeder cattle futures closed down their 4.500-cents per lb maximum daily limit on Thursday following double-digit corn market gains, traders said.
By: Theopolis Waters, Reuters
CHICAGO - Lightly traded Chicago Mercantile Exchange feeder cattle futures closed down their 4.500-cents per lb maximum daily limit on Thursday following double-digit corn market gains, traders said.
Chicago Board of Trade corn futures <0#C:> surged as much as 3 percent on worries heavy rainfall could reduce Midwest crop belt yield potential.
High-priced feed means increased input costs for feedlots.
Technical selling and lower CME live cattle contracts further pressured feeder cattle futures.
August closed at 219.050 cents per lb.
The CME feeder cattle trading limit will be expanded to 6.750 cents on Friday after Thursday's limit-down settlement.
CME live cattle fell for a third straight day on fund liquidation and weak cash price expectations, traders said.
June settled 2.175 cents per lb lower at 148.500 cents, and August down 1.750 cents at 148.575 cents.
Market-ready, or cash, cattle bids in U.S. Plains were at $147 versus feedyards asking $150 to $152, feedlot sources said. Last week, cash cattle in the U.S. Plains traded at $150.
Despite profitable margins, solid beef cutout values and fewer cattle for sale this week, packers that were buying for the Fourth of July holiday-shortened workweek were not actively seeking supplies, traders said.
Beef packer margins for Thursday were at a positive $108.80 per head, their highest so far this year, as calculated by HedgersEdge.com, fueled by lower cash and higher wholesale beef values.
Thursday morning's wholesale choice beef price slipped 28 cents per cwt from Wednesday to $255.84. Select cuts rose $1.12 to $251.51, the U.S. Department of Agriculture said.
"If they (packers) have to, they can afford to pay up but will not now that they seem to have feedlots on the run," said Oak Investment Group president Joe Ocrant.
Softer cash and wholesale pork values pared initial CME lean hog futures gains, traders said.
July closed down 0.075 cent per lb at 74.650 cents, and August 0.200 cent lower at 72.150 cents.
Cash hogs in the Midwest Thursday morning sold steady to down 50 cents per cwt from Wednesday, pressured by sufficient supplies that also pulled down wholesale pork prices, regional hog dealers said.
Government data quoted Thursday morning's wholesale pork price at $82.63 per cwt, down 92 cents from Tuesday.
Investors await Friday's USDA quarterly hog report that analyst expect could show herd expansion during the March through May quarter.