Higher corn prices drop CME feeder cattleCHICAGO - Thinly traded Chicago Mercantile Exchange feeder cattle futures closed down their 4.500-cents per lb maximum daily limit on Tuesday, responding to steep corn market gains, traders said.
By: Theopolis Waters, Reuters
CHICAGO - Thinly traded Chicago Mercantile Exchange feeder cattle futures closed down their 4.500-cents per lb maximum daily limit on Tuesday, responding to steep corn market gains, traders said.
Chicago Board of Trade corn futures <0#C:> jumped nearly 8 percent after the U.S. Department of Agriculture's bullish grain report.
Pricey corn could increase input costs for feedlots.
August closed 4.350 cent per lb lower at 214.725 cents. September and October ended limit-down at 213.400 and 212.075 cents, respectively.
The CME feeder cattle trading limit will be expanded to 6.750 cents on Wednesday following Tuesday's limit-down settlement.
FEEDER CATTLE UNDERCUT LIVE CATTLE
CME live cattle closed lower, pressured by fallout in the neighboring live cattle market, traders said.
"It doesn't happen too often, but today was one of those days where the feeder cattle market really dictated the direction," said CHS Hedging analyst Steve Wagner.
June live cattle, which expired at noon CDT (1700 GMT), settled 1.800 cents per lb lower at 148.075 cents, and August down 1.600 cents to 150.700 cents.
Uncertainty regarding prices this week for market-ready, or cash, cattle exacerbated futures' losses.
Lower CME live cattle and mixed rather-than-higher beef cutout values may have tempered enthusiasm for cash prices, a trader said.
Still, less cattle for sale and impressive packer margins supportive cash price influences, he said.
Packers have not bid for cash cattle in Kansas and Texas that were priced at $150 per cwt, said feedlot sources.
Tuesday morning's wholesale choice beef price slid 76 cents per cwt from Monday to $252.46. Select cuts rose 46 cents to $249.10, the USDA said.
FUNDS HELP BOOST HOGS
Fund buying and short-covering on the last trading day of the quarter boosted CME lean hog futures, traders said.
July closed up 1.950 cents per lb to 76.200 cents, and August 2.600 cents higher at 74.375 cents
Nearby futures drew support from their discounts to the exchange's hog index for June 26 at 77.64 cents.
Speculators bought deferred months in the belief that sharply higher corn prices might discourage hog farmers from expanding their herds.
Traders are tracking cash and wholesale pork values as the meat industry prepares to wind down production before the July Fourth holiday.
Cash hog prices in the Midwest on Tuesday morning were mostly steady with Monday's sales, regional hog dealers said.
Government data quoted the morning's wholesale pork price at $81.83 per cwt, $1.08 lower than on Monday.