March 6, 2018 / 10:47 PM / 5 months ago

LIVESTOCK-Supply buildup fears undercut CME live cattle futures

    CHICAGO, March 6 (Reuters) - Chicago Mercantile Exchange
live cattle futures on Tuesday finished lower as concern about
increased supplies ahead yanked the market from early-session
highs, traders said.
   Investors exercised caution while waiting for the bulk of
slaughter-ready, or cash, cattle in the U.S. Plains to change
hands this week. 
   April         ended 0.400 cents per pound lower at 122.825
cents, and June         finished down 0.575 cent at 114.775
   Based on recent U.S. government cattle reports, the industry
will have plenty of animals to move through the pipeline, Top
Third Ag Marketing broker Jeff French said.             
   "Beef demand has been good, but it will have to remain robust
or else we're going to continue to backlog cattle," he said. 
    On Tuesday, a few cattle in the U.S. Plains brought $126 per
cwt versus mostly $127 last week. Remaining sellers are holding
out for at least $128.
    Wednesday's Fed Cattle Exchange auction of 474 animals could
set the bar for this week's cash prices.
    Market bulls believe higher packer margins and the recent
bump in wholesale beef demand bodes well for cash returns.
    Bearish investors contend that packers pulling from cattle
contracted against the futures market, and increased supplies in
the coming weeks, will kept a lid on cash prices.       
    Funds in CME's livestock markets that track the Standard &
Poor's Goldman Sachs Commodity Index           sold, or
"rolled," some of their April long positions into the June
    The "roll" process was done in advance of similar moves that
will officially begin on Wednesday and last five business days. 
    Flat-to-weaker cash feeder cattle prices and softer CME live
cattle futures pressured the exchange's feeder cattle contracts.
    March         feeders ended 0.850 cent per pound lower at
144.300 cents.

    Profit taking and lower wholesale pork prices weighed on 
CME lean hogs, said traders.
    Processors competed for supplies while taking advantage of
their impressive margins, but the Lenten season will make it
harder for packers to move significant amounts of meat, a trader
    Uneasiness over NAFTA negotiations after U.S. President
Trump signaled that he will raise tariffs on steel and aluminum
imports further weighed on CME hog futures.
    "If the Trump administration does anything with NAFTA, there
could be repercussions on the meat side, specially the hogs," 
French said.             
    April hogs         closed down 0.600 cents per pound lower
at 68.200 cents, and May         finished 1.500 cents lower at
74.250 cents.

 (Reporting by Theopolis Waters
Editing by Susan Thomas)
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