Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed higher on Monday, strengthened by short-covering following the morning’s wholesale beef price bounce, traders said.
Spot October finished 1.15 cents/lb. higher at 131.925 cents, and December up 0.25 cent to 137.575 (all figures US$).
Monday morning’s wholesale choice beef price, or cutout, climbed $1.32/cwt from Friday to $204.32. Select cuts rose $1.12 to $199.01, the U.S. Department of Agriculture said.
Grocers are already buying beef to feature during the winter, traders and analysts said.
While it appears cash prices have bottomed out seasonally, “I’m not ready to say the same for the cutout after a couple of head fakes last week,” a trader said.
Last Friday, most market-ready, or cash, cattle in the U.S. Plains sold at $126 to $127/cwt versus $118-$124 a week earlier, feedlot sources said.
“The biggest thing is those weights turning down, which has people thinking we’ve probably moved out a lot of those heavy-end cattle,” said University of Tennessee economist Andrew Griffith.
USDA’s actual slaughter data for the week ending Sept. 26 showed cattle weights, on a live carcass basis, down six pounds from the previous week, to 1,386 lbs.
Investors bought October futures and simultaneously sold deferred months in anticipation of packers paying the same or more than last week for cattle, partly based on their highly profitable margins.
The average beef packer margin for Monday was $117.15 per head, up from $106.90 on Friday, as calculated by consultancy HedgersEdge.com.
Soft corn futures and higher cash feeder cattle price indications lifted CME feeder cattle futures, with October closing at 189.375 cents, up 0.400 cents.
Hogs shrug off Friday’s weakness
CME lean hogs closed higher, reversing Friday’s modest losses, helped by short-covering and futures’ discounts to the exchange’s hog index for Oct. 8 at 74.84 cents, traders said.
Spot October, which will expire on Wednesday, settled 0.475 cent/lb. higher at 74.3 cents, and December was up 0.375 cent at 66.5 cents.
Continued retail pork buying for October Pork Month supported futures, but weak cash prices amid plentiful supplies limited market advances, traders and analysts said.
USDA quoted the morning’s wholesale pork price at $89.39/cwt, 81 cents higher than on Friday.
The government reported Monday morning’s average cash hog price in the Iowa/Minnesota market at $71.69/cwt, $2.23 lower than on Friday, in light trading.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.