CHICAGO (Reuters) - U.S. cattle futures finished a choppy session lower on Tuesday after a drop below key technical support levels triggered selling that offset firmer equity markets.
Wall Street edged higher as better-than-expected U.S. economic data overshadowed investor anxiety about Europe’s debt crisis.
Hog futures closed mostly higher as spreaders sold spot June futures and bought deferred months, while a volatile Chicago Mercantile Exchange live cattle session left traders shaking their heads.
Futures’ continued discount to last week’s mostly $121 per cwt cash cattle sales lured buyers, but others sold on rallies based on the notion wholesale beef prices may peak soon.
Spot June live cattle closed down 0.550 cent at 117.125 cents per lb. Most-actively traded August ended 0.775 cent lower at 119.200 cents.
“The feeling is we’re reaching a point where the boxed beef is topping out and supplies (cattle) are going to be larger than a year ago all the way through July,” said Don Roose, analyst with U.S. Commodities.
The U.S. Department of Agriculture on Tuesday morning estimated wholesale choice beef, or boxed beef, at $197.95 per cwt, up 33 cents from Monday. Select cuts were 84 cents higher at $186.33.
Selling of June futures accelerated after the contract drifted below support at its 10- and 20-day moving averages at 117.67 and 117.28 cents.
August also fell below 10- and 20-day moving-average support at 119.50 and 119.37 cents.
Would-be cattle market bulls roamed the sidelines amid uncertainty about this week’s cash cattle price direction.
Profitable margins may compel packers to pay at least steady prices for cattle, but that may be challenged by the fact there are 8,800 more of the animals up for sale than last week.
The average beef packer margin was at a positive $28.75 per head, compared with a negative $2.30 last week.
Feeder cattle futures closed higher, buoyed by expectations of tight supplies and a weaker corn market, which could cut costs for cattle feeders.
August feeder cattle ended up 0.700 cent at 159.175 cents. September closed 0.325 cent higher at 160.000 cents.
June hog futures finished down slightly on bear spreads and concern that packers may soon lower bids for cash hogs in an effort to recover lost margins.
Spot June hogs ended down 0.100 cent at 91.100 cents per lb. Most-actively traded July finished up 0.525 cent at 91.050 cents.
HedgersEdge estimated the average pork packer margin at a negative $12.05 per head, compared with a negative $14.75 last week.
The government on Tuesday morning quoted cash hog prices in the closely watched Iowa/southern Minnesota market $2.75 per cwt higher at $88.47.
Bullish traders also worried hog numbers could begin to increase after hog farmers aggressively moved animals to market before last week’s Memorial Day holiday -- resulting in fewer hogs now.
“The feeling in the hog market is that we’re reaching this marketing hole and supplies will go up again,” Roose said.
“Chart patterns remain positive, although we’re nearing some strong technical resistance levels in an overbought market, so you have to be careful,” he said.
Most-actively traded July on Tuesday neared 100-day moving-average resistance at 93.11 cents.
Editing by Dale Hudson