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CME: Futures Post Losses Closing Near Day Lows, Thursday

02 August 2013

US - Live cattle futures started choppy and then lost momentum in light trading to post losses of 65 cents to $1.02 1/2 and finished very near the day's lows.

August cattle closed down to $120.80.

Traders continued to wait for direction from the live and wholesale markets on Thursday. A few loads traded at $1.19 in the Southern Plains, even with a week earlier, but the bulk of the feedlots are reportedly still holding out for higher bids, write ProFarmer commentators.

October cattle closed sharply lower on the session and experienced the lowest close since June 20th, say CME analysts.

The market managed to trade near 40 higher ahead of the pit opening but was down 60 on the day into the mid-session and then pushed under the July low which attracted more selling.

News that cash cattle in Texas lightly traded at $119.00, steady with last week may have added to the bearish tone. Weak beef prices and the higher showlist this week were factors which helped to hold cash steady.

Traders came into the week expecting higher cash cattle trade than last week. The lowest boxed-beef prices since February 28th, the stiff discount of futures to the cash market, a higher showlist this week and continued evidence that cattle are being fed to a higher weight are all factors which may have contributed to the sell-off.

Weekly U.S. beef export sales for the week ending July 25th came in at 11,400 metric tonnes, compared with the prior 4-week average of 14,275. Cumulative sales for 2013 have reached 481,600 metric tonnes, down 16.6 per cent from last year's pace.

Average dressed steer weights for the week ending July 20th jumped to 866 pounds, up 4 pounds from the previous week and up 7 pounds from last year.

Last year was already a record high weight for this time of the year and the data suggests that feedlots are feeding cattle to a higher weight; perhaps due to steep premium of nearby futures to the cash market.

A Kansas packer recalled 50,100 pounds of ground beef for possible e-coli contamination.

Boxed beef cutout values were down 16 cents on the mid-day wire to $186.16. This was down from $187.66 one week ago.

Slaughter came in right on trade expectations at 123,000 head.

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