Chicago Mercantile Exchange live cattle futures Tuesday slipped on profit-taking following their steep climb on Monday, said analysts and traders.
Futures on Monday jumped more than two per cent, driven by last Friday's bullish government monthly cattle report. Investors also embraced plans by Japan to relax U.S. beef import rules effective Feb. 1.
CME spot February live cattle closed at 128.275 cents per pound, 0.675 cent lower. Most-actively traded April ended down 0.425 cent, at 132.975 cents (all figures US$).
Investors also traded cautiously while waiting for cattle in the cash market to change hands.
Bearish traders cite futures' premium to last week's $122 to $124 per hundredweight (cwt) cash sales and reluctance by supermarkets to purchase beef at higher prices.
Market bulls point to fewer cattle available for sale this week and improving packer margins as supportive for cash prices.
The price for wholesale choice beef on Tuesday morning was $187.03/cwt, down 58 cents from Monday; and select cuts dropped 43 cents to $181.99, according to the U.S. Department of Agriculture.
HedgersEdge.com data showed the average beef packer margin for Tuesday at a negative $23.05 per head, compared with a negative $33.55 on Monday and a negative $55.25 on Jan. 22.
Futures investors are monitoring forecasts for the return of wintry weather to the U.S. Plains later this week that could slow the movement of livestock to processors, thereby underpinning cash prices.
CME feeder cattle pulled back on profit-taking and the weaker live cattle market.
Spot January ended unchanged at 145.8 cents. Most-actively traded March finished at 148.825 cents, 1.075 cents lower and April settled 0.925 cents lower at 152.375 cents.
Most hogs gain
Lower cash hog prices pressured February futures while expectations for tight supplies lifted remaining contracts, said analysts and traders.
Spot February hogs settled down 0.075 cent per pound, at 87.1 cents. Most-active April ended at 89.625 cents, 0.575 cent higher, and June finished up 0.525 cent to 98.175.
Record warmth in the parts of Plains allowed hogs to move to market after they had backed up on farms during frigid temperatures last week, which pressured near-term cash prices.
Packers also lowered cash hog bids to realign their margins.
The average price for hogs in the most-watched Iowa/Minnesota market on Tuesday was $84.14/cwt, down $1.60 from Monday, USDA said.
The average pork packer margin for Tuesday was a negative $4.80 per head, compared with a negative $5.30 on Monday and a negative $9.05 on Jan. 22, according to HedgersEdge.com.
But temperatures are expected to plunge by Thursday in the north-central and western Midwest, which could reduce the flow of hogs to market and underpin cash values.
Producers will avoid transporting hogs if temperatures fall in the single digits that could result in animal death loss, said Country Hedging analyst Tregg Cronin.
-- Theopolis Waters writes for Reuters from Chicago.