U.S. livestock: CME live cattle limit up on short-covering

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle nearby trading months settled up their three-cent-per-pound daily price limit on Tuesday, partly fuelled by short-covering and futures’ discounts to last week’s cash prices, traders said.

October and December live cattle ended at 143.475 and 145.775 cents, respectively (all figures US$). CME’s live cattle trading limit will be expanded to 4.5 cents on Wednesday following Tuesday’s limit-up settlement.

“I think we reached that point to where the discount was just too big for potentially tighter supplies in the fourth quarter,” said U.S. Commodities analyst Don Roose.

Last week, market-ready (cash) cattle in the U.S. Plains fetched $142 to $143.50/cwt, down as much as $5 from the week before, feedlot sources said.

Packers needed fewer cattle before Labour Day, but they are now buying for the first full work week after the holiday, a trader said.

Wholesale beef prices are expected to grind lower after Labour Day signaled the end of the traditional summer grilling season, he said.

The morning’s wholesale choice beef price dropped 87 cents, to $239.20/cwt, from Friday. Select cuts rose 53 cents, to $228.92, the U.S. Department of Agriculture said.

U.S. stock’s more than two per cent rebound sparked fund buying across several commodities, including CME live cattle.

Furthermore, funds trading CME’s livestock markets shifted October long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (SP+GSCI).

Tuesday was the first of five days for the SP+GSCI roll process.

Live cattle futures buying boosted CME feeder cattle contracts, with September ending 2.95 cents higher at 204.3.

Mainly firm hog futures

CME October hogs closed weak as plentiful supplies pressured cash prices, while speculative buying and the roll by funds underpinned remaining trading months, traders said.

Spot October closed down 0.375 cent/lb. to 68.775 cents, December up 0.25 cent to 63.6 and February 0.4 cent higher at 68.2.

Tuesday morning’s Midwest cash hogs traded steady to $1/cwt lower than last Friday, regional hog dealers said.

The three-day holiday weekend may have backed hogs up on farms, but packers want to capitalize on their profitable margins and solid pork demand by processing as many hogs as possible, the dealers said.

Tuesday morning’s wholesale pork price at $85.67/cwt was up 36 cents from Friday, led by the $4.29 rise in costs for pork bellies.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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