May 16, 2018 / 9:40 PM / a year ago

LIVESTOCK-Live cattle drop on weak cash prices, big supply

    By Karl Plume
    CHICAGO, May 16 (Reuters) - Chicago Mercantile Exchange live
cattle futures         dropped for a third straight session on
Wednesday on weakening cash cattle prices and plentiful supplies
of market-ready animals, traders said.
    Actively traded CME August live cattle futures       
settled 1.350 cents lower at 99.050 cents per pound, its lowest
since April 4. June cattle        ended down 1.150 cents at
101.825 cents.
    Futures are down more than 5 percent this week as packers
have been buying cattle at sharply lower prices at U.S. Plains
feedlot markets. The bulk of the week's cattle offerings remain
unsold, but cash prices are expected to remain weak, traders
    Fed cattle supplies are expected to remain ample for at
least the next month, they said.
    "The packers have the market power and they are flexing
their muscles right now," said Rich Nelson, chief strategist
with Allendale Inc.
    A moderate number of cattle at U.S. Plains feedlot markets
have already traded from $112 to $118 per cwt, well below last
week's sales of mostly $122 per cwt, traders said.
    No cattle were sold at Wednesday's Fed Cattle Exchange
    Wholesale beef prices have edged lower in recent days, but
packer margins remain stout. The average beef plant margin on
Wednesday was estimated at $173.95 per head, up from $142.55 a
week ago, according to livestock marketing advisory service                   
    Feeder cattle futures fell in tandem with sinking live
cattle, with the actively-traded August contract        ending
1.725 cents lower at 136.725 cents per pound.
    Lean hog futures         rebounded from the prior day's
losses, supported by tightening hog supplies and expectations
for seasonally improving demand for pork.
    Gains, however, were capped by concerns that exports could
slow if negotiations for a revamped North American Free Trade
Agreement (NAFTA) are unsuccessful.             
    CME June hogs        gained 1.175 cents to 75.900 cents per
pound while July hogs        ended 1.025 cents higher at 78.725

 (Reporting by Karl Plume
Editing by Alistair Bell)
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