Chicago Mercantile Exchange (CME) live cattle futures on Friday sagged as investors adjusted positions before the U.S. Department of Agriculture's monthly cattle-on-feed report at 2 p.m. CT, analysts and traders said.
Analysts on average expect the data to show the number of animals placed in feedlots last month dropped from a year ago due to costly feed.
USDA at the same time will issue its monthly cold storage report to include total February beef and pork inventories.
CME live cattle were poised to finish the week up marginally despite disappointing cash cattle and wholesale beef values.
"Other than sporadic short-covering, I saw no fundamental reason to be long futures," a trader said.
Cash cattle this week traded at $124-$125 per hundredweight (cwt), compared with $126-$127 last week, said feedlot sources (all figures US$).
And government data showed the price for wholesale choice beef Friday morning at $192.17/cwt, down 81 cents from Thursday. It was also at a rare 87-cent discount to select cuts at $193.04.
"Beef prices are exceedingly high and looks like there is a cross price substitution between beef, chicken and pork," said Linn Group analyst John Ginzel.
Slack wholesale beef demand wore down packer margins, prompting them to lower cash cattle bids.
And processors will need fewer cattle for next week that will be shortened by one day due to the Good Friday holiday on March 29.
April live cattle were down 0.225 cent per pound to 126.2 cents. June were 0.825 cent lower at 121.175 cents.
Feeder cattle futures felt pressure from the live cattle market. CME feeder cattle are on track to end down more than one per cent for the week, extending losses for a third straight week.
Spot March feeder cattle were 0.5 cent/lb. lower at 134.65 cents. It earlier marked a new contract low of 134.55 cents.
Most-actively traded April was 138.05 cents, down 0.25 cent.
Hogs mixed on spreads
Hog futures settled mixed in anticipation for possibly lower cash hog prices that fueled bearish spreads, traders and analysts said.
The average hog price the eastern Midwest region Friday morning was $68.53/cwt, down 24 cents from Thursday, according to USDA. Hog prices elsewhere in the Midwest were unavailable.
"Sloppy pork demand makes me wonder if packers are going to actively buy hogs next week," a trader said.
One less day to slaughter hogs next week will limit packer need for supplies.
And hogs have become readily available as some producers marketed animals early to avoid potentially lower cash prices next week.
From Monday to Friday, packers processed 2.128 million hogs, 11,000 more than a week ago and up 44,000 from a year earlier, according to USDA.
CME hogs are on track to end the week almost two per cent lower.
Spot April hogs were at 78.05 cents/lb., down 0.3 cent. Most-actively traded June was up 0.175 cent, to 89.725 cents.
-- Theopolis Waters writes for Reuters from Chicago.