Chicago | Reuters –– Chicago Mercantile Exchange live cattle closed mixed on Monday, pressured by last week’s lower cash prices but supported by bear spreads, traders said.
Bear spreads consisted of investors who bought back months and simultaneously sold nearby contracts with the view that Friday’s U.S. Department of Agriculture monthly Cattle-On-Feed report confirmed tight cattle supplies ahead.
Last Friday, market-ready, or cash cattle, moved at $159 to $160 per hundredweight (cwt), according to feedlot sources (all figures US$).
This week, investors are looking for steady or lower cash cattle returns based on eroding packer margins and lacklustre wholesale beef demand.
Monday morning’s choice wholesale beef price rose 66 cents/cwt from Friday to $244.37. Select climbed 91 cents to $230.52, USDA said.
The government’s monthly cold storage report, issued at 2 p.m. CT, showed the total August beef inventory at 343.7 million pounds, down six per cent from July and down 20 perc ent from a year ago.
October live cattle finished 0.125 cent/lb. weaker at 155.5 cents, and December was down 0.05 at 158.65 cents. February closed up 0.35 cent at 160.6 cents, and April 0.8 cent higher at 160 cents.
CME feeder cattle futures closed mostly higher as investors bought back months and sold the September contract that will expire on Sept. 25.
Deferred trading months drew more support from fund buying and deferred-month live cattle market advances.
September closed down 0.3 cent/lb. at 230.3 cents. October settled 0.55 cent higher at 229.275 cents and November at 227.425 cents, 1.1 cents higher.
Hogs up with pork prices
CME lean hogs settled higher, helped by a rebound in the wholesale pork price as grocers stock up for National Pork Month in October, traders said.
USDA data showed the Monday morning wholesale pork price up $1.35/cwt from Friday at $114.89.
The morning’s wholesale pork price upswing stirred bull spreads, which consisted of traders who bought the October contract and sold back months.
December drew support from its discount to CME’s hog index at 105.14 cents. Upward momentum lifted the contract beyond the 100-day moving average of 95.57 cents, which triggered fund buying.
Traders eye slaughter-ready cash hog returns as some packers buy for this week while others await a seasonal supply buildup.
The average hog price in the western Midwest Monday morning was down 57 cents per cwt from Friday to $104.95, said USDA.
Monday’s USDA cold storage report showed total August pork stocks at 546.3 million lbs., up two per cent from July and down marginally from a year earlier.
October lean hogs closed 1.325 cents/lb. higher at 107.3 cents, and December at 95.7 cents, up 0.85 cent.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.