Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Tuesday on short-covering, ending five straight losing sessions, led by bearish fundamentals, traders said.
December live cattle closed 0.95 cent per pound higher at 162.4 cents, and February was at 163.05 cents, up 1.175 cents (all figures US$).
Investors who had recently been short the market pocketed profits in preparation for upcoming Christmas holiday vacations, a trader said.
Futures’ upswing on Tuesday might be short-lived unless bearish fundamental indicators turn bullish, he said.
Packers lowered bids for market-ready (cash) cattle to recover lost margins and drive up wholesale beef prices, traders and analysts said.
Cash cattle bids in the U.S. Plains were at $162 to $164 per hundredweight (cwt) versus up to $170 asking prices, feedlot sources said. Last week, cash cattle moved at mainly $166 to $168.
Tuesday morning’s choice wholesale beef price slipped 33 cents/cwt from Monday to $251.65. Select rose $1.73 to $237.09, the U.S. Department of Agriculture said.
Investors were watching December and February futures’ 100-day moving averages of 161.62 cents and 161.91 cents, respectively, that are major levels of support.
CME’s December feeder contracts drew support from live cattle market advances.
Higher corn costs and mostly steady to $2/cwt lower prices for feeder cattle in local markets weighed on remaining futures contracts.
January ended 0.9 cent/lb. higher at 232.775 cents, March closed at 227.35 cents, down 0.875 cent, and April was 0.7 cent lower at 227.225 cents.
Mostly weak hogs
CME December futures, which will expire Friday (Dec. 12), attracted buyers because it remained underpriced to the exchange’s hog index for Dec. 5 at 88.3 cents.
Deferred hog contracts settled moderately lower on tepid wholesale pork demand and in anticipation of softer prices for slaughter-ready (cash) hogs, traders said.
Early Tuesday, slaughter hogs in the Midwest generally sold steady to 50 cents/cwt lower, said regional hog dealers.
Some packers have inventory needs met through next week while a few others are buying hogs to fill in this week’s production, they said.
Short-covering and investors probing for a market bottom at times landed contracts in positive territory.
December closed up 0.375 cent/lb. to 86.95 cents, February was 0.525 cent lower at 84.6 cents, and April was at 86.225 cents, down 0.125 cent.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.