U.S. live cattle futures turned lower as investors took profits while waiting for this week's cash cattle trade to develop, said analysts and brokers.
Chicago Mercantile Exchange live cattle traders looked to the cash cattle market for direction after factoring in the arrival of a snowstorm in parts of the U.S. Plains by midweek.
Forecasters are calling for three to six inches of snow from eastern Colorado into western and northern Kansas and Nebraska, with a possibility of up to 12 inches in areas of the north-central Midwest.
Significant snowfall and blizzard-like conditions could render some roads impassable, making it difficult for ranchers and hog producers to transport their animals to packing plants.
"The market may have overdone it to the upside after pricing in the first big snowstorm of the year and is trying to figure out what to make of this big premium we (futures) have to cash," a trader said.
Spot December cattle closed 0.775 cent per pound lower, or down 0.6 per cent, at 128.225 cents. Most actively traded February ended off 0.55 cent, or 0.41 per cent lower, at 132.95 cents (all figures US$).
CME live cattle traders are expecting cash to trade roughly steady with a week ago at $124 to $124.50 based on future's premium to recent cash sales and improved packer margins.
However, processors will need fewer animals due to plant closures for at least one day next week in observance of the Christmas holiday on Dec. 25.
Packers may also offset cash costs by cutting slaughters, which could help support wholesale beef prices.
So far, no cash bids or asking prices were reported.
HedgersEdge.com put the average beef packer margin for Tuesday at a negative $38.95 per head, compared with a negative $28.50 on Monday and a negative $50 on Dec. 11.
The wholesale price for choice beef Tuesday morning was $194.10 per cwt, down 76 cents from Monday; the select price was $174.90, up 45 cents, according to the U.S. Department of Agriculture.
"We're staring at two weeks of soft demand for beef that will not get reinvigorated until grocers actively feature product after the holidays," said Linn Group analyst John Ginzel.
CME feeder cattle fell on profit taking and live cattle market selling.
January closed 2.05 cents/lb. lower, losing 1.33 per cent, at 152.2 cents. March settled 1.85 cents lower, or down 1.18 per cent, to 154.4 cents.
Hogs up on cash, weather
Hog futures rallied with stronger-than-expected cash hog values which stirred short-covering, a trader said.
USDA Tuesday morning showed the average price for hogs in the most-watched Iowa/Minnesota market at $82.36 per hundredweight, $2.84 higher than Monday.
Others, however, are waiting for the government's afternoon hog data that includes a larger sampling of packers.
Those who bought futures believe packers hiked bids in the Plains to entice producers to move animals if farms are shut in by inclement weather over the next few days, the trader said.
But, some hog farmers are already sending hogs to market ahead of schedule to avoid the storm and possibly lower cash prices next week, he said.
February hog futures settled at 85.275 cents/lb., up 0.525 cent, or 0.62 per cent higher. April finished at 90.275 cents/lb., up 0.475 cent or 0.53 per cent higher.
-- Theopolis Waters writes for Reuters from Chicago.