LIVESTOCK-US live cattle futures slip on profit-taking

Fri Aug 9, 2013 3:32pm EDT
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* Traders step back after Tyson news
    * CME live cattle weaken feeders
    * Profit taking weakens CME hogs

    By Theopolis Waters
    CHICAGO, Aug 9 (Reuters) - Chicago Mercantile Exchange live
cattle futures on Friday dipped on profit-taking, a day after
surging to a three-month high after Tyson Foods said it would no
longer buy cattle given the feed additive Zilmax, traders and
analysts said.
    In a letter to feedlot operators, Tyson Foods Inc,
the country's largest meat processor, said it will suspend
purchases of cattle given the growth additive Zilmax, starting
Sept. 6. Tyson said it made the decision after some cattle
arrived at its plants having trouble walking, possibly because
of the added weight.   
     Since then CME live cattle traders bought deferred-month
contracts on the view that cattle raised without the additive
would be lighter, which could drive up beef prices.
    "It appears to us that the market is overreaching to an
anticipated tonnage reduction," said Hales Cattle president
David Hales.
    He noted that other packers will still process Zilmax-fed
cattle, or else switch to Optaflexx, another growth enhancer.
     Still, the thinly traded 2014 contracts retained a slight
portions of the gains notched this week. 
     "Even if those weights come down just a hair from packers
not using Zilmax, we're going to have tighter cattle numbers
which means less beef because of last year's drought," a trader
    Recent futures' advances drove expectations for higher cash
cattle prices this week. 
    Cash cattle bids in the Southern Plains stood at $117 per
cwt, with no response from sellers, feedlot sources said. 
    Last week, cash cattle in Texas traded at $119 per cwt and
mostly at $119 in Kansas, with some at $120 per cwt. A week ago
most live-basis cattle in Nebraska sold at $120.50.     
    The U.S. Department of Agriculture on Friday morning quoted
the wholesale price of choice beef at $188.49 per cwt, up 18
cents from Thursday. Select cuts were down 10 cents to $181.95.
    August live cattle futures ended down 0.175 cents at
122.500 cents per lb. October closed 0.200 cent lower at
126.875 cents. 
    CME feeder cattle prices were pressured by profit taking and
live cattle market weakness.
    August feeders closed at 153.850 cents, down 0.400
cent per lb, while September closed at 157.475 cents,
0.350 cent lower.
     Profit taking amid mixed cash hog prices and flat wholesale
pork values pulled down CME hogs, traders and analysts said.
     USDA data Friday morning showed the wholesale pork price,
or cutout, at $105.87 per hundredweight (cwt), down 3 cents from
     Some packers have all the hogs they need heading into the
weekend with others buying supplies for early next week, a
trader said.
     The seasonal decline in hog numbers caused a major pork
processor to schedule time off for employees on Friday,
according to traders and analysts.    
     Packers on Friday processed 378,000 head of hogs, which was
23,000 fewer than last week and down 32,000 from a year ago,
according to USDA data.
    Spot August hogs closed at 100.525 cents per lb, or
down 0.100 cent. Most-actively traded October ended at
84.975 cents, or 0.275 cent lower.