Chicago live cattle futures slid Friday as investors took profits from a big run-up and potential buyers were cautious as prices notched the biggest weekly percentage rise in four months, analysts and traders said.
Chicago Mercantile Exchange live cattle finished the week up three per cent, the highest one-week gain since Sept. 9.
Before a late retreat, CME live cattle hit an all-time high for a third day in a row at 134.325 cents, fueled by a tight supply outlook after drought last summer lifted feed costs to record highs (all figures US$).
Subsequent losses allowed February and April futures to fall below their 10-day moving averages of 133.21 and 136.95 cents, triggering fund selling.
Spot February live cattle closed 0.9 cent per pound lower at 132.95 cents. April ended at 136.775 cents, down 0.55 cent.
Investors were concerned about futures' near-term premium to cash prices that are expected to trade steady to higher against last week's $127-per-hundredweight (cwt) sales.
"Cash is going to eventually catch up to where the futures are at. The market will be alright as we get through January," said Vetterkind Cattle Brokerage president Troy Vetterkind.
Cash bids in Kansas stand at $125, a feedlot manager said. There were no bids reported by feedlot sources elsewhere in the Plains where animals are priced at $130 or more.
Packers are booking cattle for next week, the first full week of slaughters since plants shut down during the Christmas and New Year's holidays.
But, unstable wholesale beef prices and poor, but improving, margins could limit packers' spending for supplies.
The price for wholesale choice beef Friday morning was $194.82/cwt, off nine cents from Thursday at $194.82; select cuts slid $1.13 to $182.15, according to the U.S. Department of Agriculture.
HedgersEdge.com put the average beef packer margin for Friday at a negative $50.70 per head, compared with a negative $55.15 on Thursday and a negative $62.60 on Dec. 28.
CME feeder cattle moved higher, and gained 0.84 per cent for the week, as corn prices drifted lower.
Spot January ended 0.825 cents/lb. higher at 153.175 cents. Most-actively traded March was 1.425 cents higher at 156.325 cents.
Hogs slip on sell-off
Hogs at the CME slipped on profit taking and fund selling, snapping the market's four-day winning streak and sending them down 0.6 per cent for the week.
February settled off 0.175 cent/lb. at 86.225 cents. April ended at 89.850 cents, 0.325 cent lower.
Some packers lower bids for cash hogs after padding inventories for Saturday's slaughter estimated by USDA at 325,000-head.
However, renewed pork demand from retailers could prompt other processors to raise cash hog bids next week despite their unprofitable margins.
The average pork packer margin for Friday was a negative $3.25 per head, compared with a $7.05 on Thursday and a negative $5.70 on Dec. 27, according to HedgersEdge.com.
-- Theopolis Waters writes for Reuters from Chicago.