Chicago | Reuters — Chicago Mercantile Exchange live cattle futures posted steep gains Wednesday on fund buying and cash price optimism that wiped out Tuesday’s losses, traders said.
April closed up the three-cent-per-pound price limit at 154.05 cents, and June ended 2.65 cents higher at 146.325 cents (all figures US$).
CME live cattle’s trading limit will be expanded to 4.5 cents on Thursday following April’s three-cent limit settlement.
Fewer cattle for sale and increased packer margins may convince packers to spend steady or better money for market-ready or cash cattle this week.
On Wednesday, cash bids of $156 to $157 per hundredweight (cwt) surfaced in the southern Plains against $162 asking prices, feedlot sources said. Last week, cash cattle sold at mostly $158 to $160.
Futures’ discounts to last week’s cash prices, and what packers may pay for supplies this week, attracted speculative buyers.
CME live cattle climbed after April and June surpassed their respective 40-day moving averages of 152.44 and 145.24 cents, which ignited fund buying.
The lack of market liquidity amplified the day’s rally because there was no one to sell when buying started, said Hales Cattle Letter author David Hales.
CME feeder cattle closed up the 4.5 cents/lb. price limit, fuelled by technical buying and live cattle futures’ rally. The trading limit for feeder cattle will be increased to 6.75 cents on Thursday.
March closed at 207.225 cents/lb.
Lean hogs climb
CME lean hogs surged more than four per cent on short-covering and the morning’s wholesale pork price rebound that reversed futures’ three per cent plunge on Tuesday, traders said.
April hog futures ended up 2.4 cents/lb. to 68 cents, and May 1.1 cents higher at 78.625 cents.
Wholesale pork prices jumped $1.04, to $70.05/cwt, on Wednesday morning from Tuesday, supported mostly by a $3.85 rise for pork bellies, USDA said.
Processors lowered cash bids and hiked the price of pork at wholesale to preserve their modest margins, an analyst said.
Government data showed the average cash hog price in Iowa/Minnesota Wednesday morning had fallen $1.31/cwt from Tuesday to $64.25.
The day’s pork packer margins were at a positive $1.35 per head, compared with a positive $3.25 on Tuesday and a positive $8.45 per head a week ago, as calculated by HedgersEdge.com.
Fund buying and buy stops provided more support to hog contracts.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.