Chicago | Reuters — Chicago Mercantile Exchange live cattle closed higher on Wednesday, lifted by short-covering stirred by the morning’s wholesale beef price rebound, traders said.
February live cattle closed up 0.65 cent per pound, to 153.7 cents, and April 0.8 cents higher at 151.875 cents (all figures US$).
Wednesday morning’s choice wholesale beef climbed 71 cents per hundredweight (cwt) from Tuesday to $258.95. Select rose 73 cents to $249.56, the U.S. Department of Agriculture said.
Retailers are buying beef in small amounts to feature through the middle of February, an analyst said.
Early-week slaughter (cash) cattle prices were lower, but futures remained underpriced to cash returns which encouraged buyers.
Profitable packer margins, and Wednesday’s futures run-up, may cause feedlots to hold out for more money for remaining cattle.
So far, a small number of cash cattle in Nebraska sold at $159-$160, down from mostly $162-$164 there last week, feedlot sources said.
They said feedyards in Kansas have not responded to packer bids of $158 to $159/cwt.
USDA will issue the monthly cold storage report on Thursday, which will include total December beef and pork inventories.
A few analysts, on average, estimated total beef stocks last month at 395.9 million lbs., and 483.6 million for pork.
USDA’s monthly Cattle-On-Feed report is on tap for Friday.
CME feeder cattle finished higher on short-covering, weak corn prices and live cattle futures buying.
January closed 1.225 cents/lb. higher at 215.7 cents and March at 205.3 cents, up 2.825 cents.
Hogs end mixed
CME lean hogs traders bought February and simultaneously sold back months in a trading strategy known as bull spreads, a trader said.
Investors implemented the spreads in anticipation of cash hog prices bottoming out seasonally, partly based on the recent decline in hog weights.
Until then, current ample supplies have allowed packers to cut cash bids which has increased their margins.
Cash prices in the Midwest Wednesday morning were down as much as $1/cwt from Tuesday, regional hog dealers said.
Pork packer margins for Wednesday were a positive $28.35 per head, compared with a positive $22.65 on Tuesday and a positive $19.20 a week earlier, according to Colorado-based analytics firm HedgersEdge.com.
February closed up 0.575 cents/lb. to 72.35 cents, and April ended down 0.45 cents, to 74.225 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.