Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts closed higher on Tuesday amid massive short-covering spurred by higher wholesale beef values that overcame selling led by lower cash price expectations for later this week, traders said.
Spot December finished at 128.025 cents/lb., up 0.35 cent, and February 0.925 cent higher at 130.575 cents (all figures US$).
Tuesday morning’s wholesale choice beef price rose 19 cents/cwt from Monday, to $209.23. Select cuts jumped $1.55, to $198.54, based on U.S. Department of Agriculture data.
Retailers scrambled to book product following downtime at a packing plant this week for maintenance and wintry weather in sections of the Plains that may disrupt packing plant operations, a trader said.
Still, it is unlikely that processors will raise bids for market-ready (cash) cattle based on their unprofitable margins and at least one less day of production due to the Thanksgiving holiday, he said.
Last week, cash cattle in the U.S. Plains moved at $126 to $129/cwt, said feedlot sources.
Separate government estimates showed packers on Monday and Tuesday processed a combined total of 213,000 head of cattle, 10,000 fewer than a week ago.
The average beef packer margin for Tuesday was a negative $10.45 per head, compared with a negative $38.80 on Monday, as calculated by HedgersEdge.com.
Short-covering and live cattle future’s turnaround boosted CME feeder cattle contracts. Spot November closed at 173.475 cents, up 1.175 cents.
Hog futures gain sharply
CME lean hogs drew support from short-covering, bargain hunting and gains in the neighboring cattle markets, traders said.
Spot December finished 2.375 cents higher at 54.175 cents, and February up 2.325 cents at 56.375 cents.
Futures made headway despite plentiful supplies that outpaced packers’ need for hogs heading into the holiday-shortened workweek.
Cash hog prices in Iowa/Minnesota on Tuesday morning were down 23 cents/cwt from Monday to $51.71, according to USDA.
The Tuesday morning wholesale pork price of $72.59/cwt was $2.10 lower than on Monday, mostly pressured by the more than $17 plunge in pork belly values, the USDA said.
The government estimated Monday and Tuesday’s total hog slaughter at 874,000 head, 7,000 more than during the same period a week ago.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.