Chicago Mercantile Exchange live cattle futures snapped back from morning lows on Monday, helped by short-covering in response to the turnaround in wholesale beef prices, traders said.
The morning wholesale choice beef price jumped $1.23 from Friday to $200.12 per hundredweight (cwt). Select items gained $1.10, to $188.11, based on U.S. Department of Agriculture data (all figures US$).
Last week, beef prices at wholesale dropped on worries that wintry weather on the densely populated East Coast over the weekend would hurt meat demand.
“Beef at wholesale may have gotten cheap enough to entice grocer buyers. But more than one day is needed to confirm that beef demand is on the mend,” a trader said.
Uneasiness about this week’s cash cattle prices, as packers buy for the Christmas holiday-shortened work week, minimized December future’s advances.
Packing plants will be closed for at least one day next week for Christmas, making them less likely to spend more for supplies.
Last week, cash cattle in Texas and Kansas fetched $131/cwt, down $1 from the week before, feedlot sources said. They reported cash sales in Nebraska of $130 to $131, which was steady to $2 lower than the prior week.
Traders sold the December contract and bought deferred months. February purchases lifted that month above moving average resistance levels, which touched off fund buying.
December live cattle finished up 0.125 cent per pound, at 132 cents.
February ended at 133.5 cents, 0.65 cent higher. It settled above the 10-day and 20-day moving average of 133.222 and 133.039 cents, respectively.
Higher live cattle futures and weak corn prices drove lightly traded CME feeder cattle to two-month highs. Cheaper corn may encourage feedlots to buy young cattle.
January futures received more help from their early-session discount to CME’s feeder cattle index, which was at 167.8 cents.
Feeder cattle for January closed at 168.4 cents, 1.325 cents higher, and March ended up 0.825 cent at 167.375 cents.
Hog futures sag on cash jitters
CME hogs drifted to multi-month lows on concerns that packers may maintain lower cash bids due to ample supplies, traders said.
The government’s morning direct hog prices were unavailable. Hogs in the Midwest region on Monday morning traded steady to $1/cwt lower, hog dealers said.
Hog sellers are being met with limited demand from packers who are expected to shut down plants early next week for Christmas.
And producers are sending hogs to market ahead of schedule to avoid possibly lower cash prices heading into next Wednesday’s holiday.
February future’s premium to the exchange’s hog index, at 81.02 cents, deterred buyers.
Higher wholesale pork prices, led by last-gasp retail ham purchases, mitigated CME hog futures’ losses.
Monday morning’s wholesale pork price climbed $3.39/cwt, to $90.37, with ham costs surging $8.32, USDA said.
February hogs closed at 86.625 cents, 0.55 cent lower, after earlier slipping to a 3 1/2-month low. April finished down 0.425 cent at 91.075 cents and sagged to a 1-1/2 month bottom.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.