Chicago | Reuters — Most Chicago Mercantile Exchange live cattle contracts on Monday finished modestly higher after investors sold December futures and simultaneously bought deferred months in a trading strategy known as bear-spreading, traders said.
December live cattle closed down 0.025 cent per pound at 105.575 cents (all figures US$). February ended up 0.225 cent at 106.525 cents and April up 0.125 cent at 106.225 cents.
Sporadic profit-taking, sparked by beef cutout price weakness and last week’s disappointing cash prices, capped early-session market advances and initially sank futures to session lows.
Last week, slaughter-ready, or cash, cattle in the U.S. Plains moved at mostly $105/cwt, compared with $102 to $105 a week earlier, said feedlot sources.
Monday morning’s choice wholesale beef price, or cutout, dropped 41 cents/cwt from Friday, to $184.21. Select cuts jumped $1.57, to $169.28, the U.S. Department of Agriculture said.
“Typically, the USDA choice cutout trends lower in the coming weeks. This year’s seasonal (cutout) decline may be solid, despite attractive prices, because output is likely to remain active,” said American Restaurant Association analyst Jerry Dalton.
Weaker corn futures and as much as $6 per cwt higher cash feeder cattle prices drove up CME feeder cattle contracts.
November feeders, which will expire on Thursday, finished up 0.3 cent/lb. to 127.025 cents. Most actively traded January ended 1.3 cents higher at 122.325 cents.
Lower hog futures close
Profit-taking weighed on CME lean hogs despite Monday morning’s unexpectedly firm cash and wholesale pork values ahead of plant shutdowns over the Thanksgiving holiday, said traders.
Technical selling developed after December and February drifted below their respective 10-day moving averages of 46.94 and 53.82 cents.
December closed down 0.225 cent per pound to 46.9 cents, and February ended 0.75 cent per pound lower at 53.6 cents.
Processors filled inventories for this week but may encounter difficulty if producers fail to send enough hogs to market on Friday and Saturday after the U.S. Thanksgiving holiday, a Midwest hog merchant said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.