Chicago | Reuters — For the first time in five sessions Chicago Mercantile Exchange live cattle futures landed in positive territory on Tuesday, helped by the turnaround in wholesale beef values, traders said.
August closed 0.55 cent/lb. higher at 147.15 cents, and October up 0.6 cent to 150.325 cents (all figures US$).
Tuesday morning’s wholesale choice beef price (cutout) gained 63 cents/cwt from Monday to $236.63. Select cuts rose $1.58, to $234.28, the U.S. Department of Agriculture said.
Not since July 1 has the beef cutout posted an increase, based on USDA data.
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“Beef being up may be a forced deal as packers looked to offset lost margins by charging wholesalers more for product,” a trader said.
Despite the day’s beef and futures run-up, investors see processors controlling cash spending this week because of their unprofitable margins and more cattle for sale.
Processors have not bid for cattle in Texas and Kansas that were priced at $152 to $153/cwt, feedlot sources said. A week ago, U.S. Plains cattle moved at $150 to $151.50.
Beef packer margins for Tuesday were at a negative $56.60 per head, compared with a negative $51.75 on Monday and a positive $56.80 a week ago, as calculated by HedgersEdge.com.
CME feeder cattle were supported by live cattle market buying and slumping corn prices.
August closed 3.075 cents/lb. higher at 214.3 cents.
Bargain hunters lift hog futures
CME lean hogs finished higher on technical buying and deferred-month bargain hunting, traders said.
July, which will expire on Wednesday, ended up 0.85 cent/lb. to 79.925 cents, and August 1.975 cents higher at 75.925 cents.
“Futures may be realizing that we’ll see further cuts in production due to corn prices,” said Allendale Inc. market strategist Rich Nelson.
Corn prices on Tuesday tumbled 10 cents per bushel, but hit fresh contract highs in Monday evening’s electronic session, he said.
In spite of Tuesday morning’s soft cash prices, some packers may be forced to compete for hogs in the near term as warmer weather crimps supplies, traders and analysts said.
The average price of cash hogs in Iowa/Minnesota on Tuesday morning were at $77.59/cwt, down 51 cents from Monday, USDA said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
