Chicago | Reuters — Chicago Mercantile Exchange live cattle closed mostly higher on Monday after investors sold June futures and simultaneously bought deferred months in a trading strategy known as bear spreading, traders said.
Weak wholesale beef prices further pressured the June contract, they said.
Monday morning’s wholesale choice beef price slipped 41 cents per hundredweight (cwt) from Friday to $232.25 (all figures US$). Select cuts dropped 86 cents to $221.04, the U.S. Department of Agriculture said.
CME live cattle back months drew more support from their discounts to last week’s prices for slaughter-ready or cash cattle.
Last week, cash cattle in the U.S. Plains fetched $143/cwt, feedlot sources said.
“It was a quiet day today. People focused on futures discount to cash, while waiting to see what’s going to happen with cash prices this week as supplies start to grow seasonally,” a trader said.
Fund buying developed after the August contract broke through the 10-day moving average of 138.692 cents.
June ended at 137.7 cents, down 0.1 cent. August closed 0.525 cent higher at 139.125 cents, and October was up 0.425 cent to 143.025.
CME feeder cattle settled higher, underpinned by mostly firm live cattle futures and stronger prices for feeder cattle in local markets.
August finished 0.525 cent higher at 197.575 cents, and September up 0.475 cent to 198.6 cents.
Most hogs up on tight supply ideas
Most CME hog contracts closed higher, led by bear spreading in anticipation of tight supplies this summer pegged to the porcine epidemic diarrhea virus, traders said.
“There is definitely going to be less hogs coming. Right now we need to see the product hold these gains,” said R.J. O’Brien hog futures trader Tom Cawthorne.
Government data on Monday showed the morning’s wholesale pork price surged $2.96/cwt from Friday to $118.97.
August hog futures led advances, with help from fund buying after the contract surpassed the 20-day moving average of 125.079 cents.
Futures’ premium to CME’s hog index was at 110.67 cents, and packers needing fewer hogs in the near term, pulled down the June contract.
June hogs ended down 0.225 cent/lb. at 113.125 cents. July closed up 0.575 cents at 121.050, and August 1.15 cents higher at 125.95.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.