Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures finished nearly two per cent higher on Friday as supply-strapped packers spent more for slaughter-ready, or cash, cattle than expected, traders said.
October live cattle settled ended up 2.7 cents per pound at 159.75 (all figures US$). December closed at 160.925, up 2.425 cents after spiking to a new contract high of 161.2 cents.
Investors actively bought live cattle futures after packers hiked cash bids from $158 to $163 per hundredweight (cwt), sparking $163 sales in Kansas, up $8 from last week.
Texas followed by trading $163/cwt, $7 to $8 higher than last week. This week, cash cattle in Nebraska fetched $158 to $163/cwt, $1 to $6 more than a week ago.
To offset steep costs for cattle, packers upped beef prices at wholesale which lifted cutout values, traders and analysts said.
Friday afternoon’s choice wholesale beef price, or cutout, rose 55 cents/cwt from Thursday to $248.67. Select climbed $1.56, to $236.25.
This week’s supportive fundamentals generated bull spreads that consisted of traders who bought the October contract and simultaneously sold deferred months.
Monday will be the first of five days for funds in CME’s live cattle and hog markets to shift October long positions further back. The process is known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Investors on Monday will consider taking profits after this week’s rally or continue to buy futures based on their discounts to cash prices.
CME live cattle market advances drove feeder cattle futures to a record high for a second straight session.
September closed 1.925 cents/lb. higher at 225.725 cents, and October ended 2.375 cents higher at 224.375 cents.
Hogs up nearly three per cent
CME live hogs gained almost three per cent fueled by the five-day upswing in cash prices, traders said.
October closed 2.975 cents/lb. higher at 105.625 cents. December ended up the maximum three-cents-per-pound daily price limit at 95.45 cents.
The afternoon’s average hog price in Iowa/Minnesota rose $1.80/cwt from Thursday, to $98.71, according to USDA.
Packers bought hogs for Saturday’s estimated 134,000-head kill to make up for Monday’s holiday downtime.
Short-covering pushed October and December beyond their major 100-day moving averages of 105.42 and 94.94 cents, respectively.
Investors are eyeing wholesale pork demand as the summer grilling season eventually transitions to cooler weather that is more suited for cooking indoors.
The morning’s wholesale pork price dropped 66 cents/cwt from Thursday to $102.82, USDA said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.