Chicago | Reuters –– Chicago Mercantile Exchange live cattle contracts closed higher on Tuesday, led partly by the day’s wholesale beef price upswing, traders said.
April ended up 0.775 cent per pound at 159.6 cents, and June 1.475 cents higher at 150.425 cents (all figures US$).
Tuesday morning’s choice wholesale beef price jumped $1.60 per hundredweight (cwt) from Monday, to $259.30. Select cuts were up $1.55 at $250.74, the U.S. Department of Agriculture (USDA) said.
Packers recently curbed production to limit cash spending, recover lost margins and elevate wholesale beef values.
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“We just don’t have the outlet for the product in a fashion that would allow us to kill any more cattle,” said West Oak Commodities analyst Tom Tippens.
The day’s beef packer margins were a negative $18.30 per head, compared with a negative $55.10 on Monday and a negative $45.90 a week ago, according to HedgersEdge.com.
Futures’ discounts to last week’s prices for market-ready, or cash, cattle stirred additional buying despite lower cash expectations for this week because of more livestock for sale.
Last week, cash cattle in the U.S. Plains moved at $163 to $165.50/cwt.
June moved beyond the 100-day moving average of 150.08 cents, which touched off fund buying and buy stops.
CME feeder cattle contracts drew support from live cattle futures buying and futures’ discounts to the exchange’s latest feeder cattle index at 219.57 cents.
April closed 0.95 cent/lb. higher at 213.2 cents, and May up 0.75 cent at 210.8 cents.
Hogs mostly weak
CME’s April lean hog contract was supported by speculation about where it will settle after it expires on Wednesday.
Lower cash and wholesale pork prices pressured May and June futures that will draw the attention of investors following April’s expiration, they said.
April closed up 0.075 cent/lb. at 63.175 cents, May 0.725 cent lower at 71.7 cents and June finished down 0.3 cent at 78.475 cents.
The USDA data showed the morning’s average cash hog price in Iowa/Minnesota was $61.09/cwt in light volume, down $1.26 from Monday.
Separate government data showed the morning’s wholesale pork price dropped 62 cents/cwt from Monday to $65.35, the USDA said.
An attitude has begun to develop that hog prices may have bottomed out amid tight supplies and weaker product prices might generate more demand, said Tippens.
— Theopolis Waters reports on livestock futures for Reuters from Chicago.
