Chicago | Reuters — Chicago Mercantile Exchange live cattle closed higher on Tuesday as strong beef demand and expectations of higher prices in the cash market lent support, traders said.
“When you have futures trading at a discount to the cash market, that usually creates a bullish situation,” Lane Broadbent, president of KIS Futures, said.
Last week, cash cattle in the U.S. Plains sold at $143 per hundredweight (cwt), feedlot sources said (all figures US$). This week the showlist — the list of cattle for sale — is smaller and could push prices higher, traders said.
“Nothing has been in the way of this cattle market, no stock market break, and beef demand has not slowed down. Everything has been pretty good,” said Broadbent.
Tuesday morning’s wholesale choice beef price rose 44 cents/cwt from Monday to $232.87. Select cuts jumped $2.68 cents to $224.16, according to U.S. Department of Agriculture data.
Higher wholesale beef prices lent support to the front-month June contract.
June, which expires at the end of the month, ended at 138.3 cents, up 0.6 cent. August closed at 140.1 cents, 0.975 cent higher.
CME feeder cattle settled higher, supported by firmer live cattle futures and weaker priced corn.
August finished 0.725 cent higher at 198.3 cents, and September up 0.125 cent to 198.725 cents.
Constrained supply boosts hogs
Most CME hog contracts closed higher on the expectation of continued tight supply due to porcine epidemic diarrhea (PED), which has killed piglets and trimmed the U.S. hog herd, traders said.
“The market is still worried abut hog production, especially in the fall,” said Dominic Varricchio, commodities broker at Schwieterman, Inc.
Both CME August and October lean hog contracts rose more than one per cent on the concerns of constrained supplies.
Prices in the cash market held steady early on Tuesday. Reduced production days at packing plants and heavier hog weights helped to offset less available animals in the wake of PED, Varricchio said.
Separately, government data on Tuesday showed the morning’s wholesale pork price slipped 20 cents/cwt from Monday to $118.04.
June hogs, which expires mid-month, ended up 0.475 cent/lb. at 113.6 cents. July closed up 1.25 cents at 122.3.
— Meredith Davis reports on ag commodities for Reuters from Chicago.