Chicago / Reuters – Chicago Mercantile Exchange live cattle reached a record high on Thursday, helped by futures’ discounts to last week’s cash cattle prices and short-covering after recent market losses, traders said.
October, which will expire on Friday, closed up 1.500 cents per lb at 170.500 cents, and December was at 167.325 cents 0.575 cent higher.
CME live cattle buying accelerated after contracts surpassed Wednesdays highs, which touched off buy stops.
In a strategy known as bull spreads, traders bought the December contract and simultaneously sold February in anticipation of tight supplies this winter.
On Thursday, market participants waited for this week’s prices for market-ready, or cash, cattle that last week fetched a record-high $170 per hundredweight.
Cash cattle bids in the U.S. Plains surfaced at $165 to $167 per cwt against up to $172 asking prices, feedlot sources said.
Market bears expect packers to curtail slaughters and bridle cash spending to recover lost margins and boost wholesale beef prices.
Thursday morning’s choice wholesale beef price dipped 2 cents per cwt from Wednesday to $253.61. Select slipped 3 cents to $239.74, the U.S. Department of Agriculture said.
Bullish participants contend packers are short-bought cattle as retailers prepare to feature rib-eye steaks and roasts in November.
CME feeder cattle drew support from live cattle market advances and futures’ discounts to the exchange’s feeder cattle index for Oct. 29 at 239.30 cents. October, which expired at noon CDT (1700 GMT), closed up 0.900 cent per lb at 239.750 cents per lb. November feeder cattle, the new lead month, ended 1.175 cents higher at 234.225 cents.
Hogs drift lower
CME lean hogs closed lower on persistent cash price pressure and the morning’s wholesale pork price downturn, traders said.
December ended 1.400 cents per lb lower at 87.200 cents, and February was 1.100 cents lower at 86.950 cents.
Thursday morning’s average hog price in the western Midwest dropped $1.54 per cwt from Wednesday in light volume to $84.58, USDA said.
Separate USDA data showed the morning’s wholesale pork price was down $1.45 per cwt from Wednesday to $97.90, weighed on by the $7.13 drop in loin values.
Cool fall temperatures and cheaper corn are causing hogs to reach market weight quicker. And, farmers are moving hogs to packing plants ahead of time to avoid lower prices.
Pork end-users are no doubt aware that hog numbers have caught up to last year’s levels and weights are running about 7 lbs heavier than the same period a year ago, said livestock futures trader Dan Norcini.
Short-covering and investors searching for a market bottom might lend support to hog futures on Friday, the last trading day for the month of October, another trader said.