LIVESTOCK - U.S. live cattle end up in a tepid recovery

Mon Feb 11, 2013 2:52pm EST
 
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* Technical bounce rather than convincing fundamental gains
    * Boxed beef market showing mixed trend
    * Poor profits limit upside in cattle and hogs

    By Sam Nelson
    CHICAGO, Feb 11 (Reuters) - Chicago Mercantile Exchange live
cattle futures closed higher  on Monday on a technical
short-covering bounce after the steep slide of prices on Friday
and the market showed a lack of momentum to the upside, traders
said.
    "We opened higher, turned down on liquidation and then
bounced back so everybody is waiting to see where we go from
here," said Jim Clarkson, a broker for A&A Trading Inc.
    "The showlists (number of market ready fed cattle) are down
substantially this week but the market still looks ugly to me."
    CME February cattle were up 0.425 cents per lb at
126.875  cents and April cattle were up 0.225 cents at
130.350 cents.    
    Some position-squaring was noted after cattle futures
tumbled on Friday following the U.S. government's projection of
a big increase in beef production this year and on
lower-than-expected prices for cash cattle. 
    Although the cattle futures market ended firm on Monday,
traders and analysts said the market trend lacked conviction. 
     "Boxed beef continues to work lower and I think people just
aren't spending money, that's doing it (weighing on cattle
futures). It's more of a demand issue than oversupply issue,"
said Jack Salzsieder, analyst for K&S Financials.
    "There's a lack of money flow into commodities from funds
and when that happens markets usually go down."   
    Wholesale boxed beef prices had fallen sharply late on
Friday but showed a partial recovery by Monday with choice
carcasses up 0.27 cent per lb at $182.39 per cwt but select
carcasses were down another 0.54 cent per lb at $179.08.
 
    "It was a disappointing technical close on Friday and
fundamentally cash cattle in the Plains only trading steady was
disappointing," said Dennis Smith, a broker for Archer
Financial.
    Some relief to the market followed the passage of a major
winter snowstorm in the U.S. northeast that had kept consumers
indoors, away from the retail meat counters and away from dining
out at popular steak houses. 
    Also hopes for an easing of Russian meat import restrictions
led to some support for cattle futures.
    Senior U.S. officials on Monday called on Russia to
immediately restore market access for U.S. meat products.
 
     However, the head of Russia's consumer safety watchdog told
Interfax on Monday the Russian ban on U.S. beef, pork and turkey
imports coming into effect this month is likely to last for a
long time. 
     Deliveries on the February contract totaled 15. Rosenthal
Collins Group issued the deliveries and ADM Investor Services
stopped the deliveries.         
    Average beef packer margins on Monday were estimated at a
negative $75.95 per head, down from a negative $61.45 on Friday
and up from a negative $86.95 a week earlier, according to
HedgersEdge.com. 
    Feeder cattle futures turned down in the nearby contracts on
waning demand for young cattle to place on feed but deferred
months were up on falling Chicago Board of Trade corn futures.
 
    The lower corn prices and outlooks for a record U.S. corn
crop this year that could drop prices further helped encourage
increased demand for feeder cattle due to the potential for
lower feeding costs.
    CME feeder cattle for March were down 0.200 cents
per lb at 144.800 cents and April was up 0.425 at
148.625.
    
    HOG FUTURES MIXED AMID UNCERTAINTY
    CME hog futures were mixed with nearby months firm on
spreads due to short-covering amid oversold technicals and
deferred months fell on poor profit margins in the hog feeding
business.
    Traders said there was a good deal of uncertainty in the hog
futures market and many were adopting a wait-and-see attitude.
    "We're at a discount to cash, everyone thinks cash will fall
this week so they're just waiting to see," Clarkson said.
    Cash hogs around the U.S. Midwest traded 50 cents to $1.00
per cwt lower on Monday as poor packer margins limited demand,
dealers said. 
    Dealers expect a softer market this week as packers continue
to lower their bids due to sinking cash margins.
    Average pork packer margins on Monday were estimated at a
negative $13.70 per head, up from a negative $15.35 on Friday
and down from a negative $8.15 a week earlier, according to
HedgersEdge.com. 
    CME February hogs were up 0.450 cents per lb at
86.900  cents and April was up 0.250 at 86.375.