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CME: Cattle Move Lower as Boxed Beef Hits $208 High

16 May 2013

US - Live cattle futures probed higher in early trading on rising dressed beef prices but then lost ground in sympathy with the general selloff in commodities and rise in the US dollar.

Live cattle finished 55 cents to 90 cents lower and near the Wednesday's lows. Choice boxed beef moved substantially higher to a record high of $208.18 this morning, up $2.09, write ProFarmer commentators.

Importantly, movement improved to 144 loads. Meanwhile, cash trade seems to be stymied as feedlots hold out for higher prices than week-ago, while packers have been slow to establish bids.

June cattle closed sharply lower on the session and experienced the lowest close since April 15th. The market saw choppy to higher trade early on Wednesday and traded slightly higher on the day into the mid-session, write CME analysts.

The upside was limited by talk that record high beef prices could encourage consumers to shift to other meats. However, the market also found support from a new record high beef price posted on Tuesday and that this could help encourage packers to pay at least steady for cash this week.

Packer margins jumped on the beef move so packers have incentive to own live inventory. Steady this week would leave June near a $5.00 discount as compared with $1.00 as a normal discount for this time of the year. Open interest fell 6,416 contracts on Tuesday to the lowest level since January.

For the Cattle-on-Feed report, traders see placements for April up about 12-13 per cent from last year and marketings up 2-3 per cent which would leave May 1st on-feed supply down 3.5-4.0 per cent from last year.

Choice boxed-beef cut-out was up $2.09 at mid-session to $208.18 from $204.67 last week which marks a new all-time high.

Select beef was up 63 cents to $192.70.

Slaughter came in slightly higher than expected at 125,000 head.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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