Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Monday, reversing initial weakness helped by short-covering and the morning’s wholesale beef price bounce, traders said.
June closed up 0.55 cents per pound at 152.45 cents, and August 1.225 cents higher at 151.9 cents (all figures US$).
Monday morning’s wholesale choice beef price jumped $2.03/cwt from Friday, to $253.35. Select cuts climbed $1.93, to $248.16, the U.S. Department of Agriculture said.
Investors are monitoring beef demand as retailers buy product for the U.S. July 4 holiday.
Futures received more support from talk that fewer cattle for sale in parts of the Plains this week might underpin cash prices.
Last week, market-ready (cash) cattle in the U.S. Plains moved at mostly $150/cwt, feedlot sources said.
In a trading strategy known as bear spreading, market participants sold the June contract and simultaneously bought deferred contracts.
Investors implemented the spreads amid concern about potential deliveries against the June contract that will expire June 30.
The spreads propelled August beyond the where the 10-day and 20-day moving averages converged at 151.51 cents, which ignited fund buying.
Traders await USDA’s monthly cold storage report on Monday at 2 p.m. CT that will include May beef and pork stocks.
A few analysts, on average, estimated last month’s cold storage total beef stocks at 459.8 million lbs., and pork stocks at 684.8 million lbs.
CME feeder cattle drew support from technical buying and live cattle futures gains.
August ended up 2.35 cents/lb. at 225.775 cents.
Hogs sag with cash prices
Soft cash hog prices contributed to CME lean hogs’ slide to new contract lows, traders said.
July closed down 1.525 cents/lb. at 74.225 cents, and earlier sank to a contract low of 73.15 cents in electronic trading. August finished 1.45 cents lower at 72.375 cents, and posted a fresh contract low of 71.175 cents.
Cash hogs prices in Iowa/Minnesota marked their fifth straight loss based USDA data that showed Monday morning’s average cost at $75.38/cwt, down 12 cents from Friday.
“There’s no incentive for producers to hold hogs back, and for this time of year there are a lot of pigs out there,” a Iowa hog dealer said.
Prospective futures buyers exercised caution in advance of the government’s quarterly hog report on Friday that might reveal more production than anticipated.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.