U.S. livestock: CME live cattle rally on fund buying, beef demand

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures posted sharp gains on Wednesday, bolstered by technical buying and much-improved wholesale beef demand, traders said.

June live cattle closed up 1.8 cents/lb. to 123.025 cents, after topping the 100-day moving average of 122.67 cents (all figures US$). August ended 2.725 cents/lb. higher at 118.725 cents and settled above the 20-day moving average of 117.34 cents.

Retail and restaurant purchases of beef for Father’s Day and Fourth of July featuring lifted the beef cutout value for a third straight day.

The morning’s choice beef price, or cutout, was at $225.15/cwt, 88 cents higher than on Tuesday. Select cuts climbed $1.12 to $202.28, the U.S. Department of Agriculture said.

Prices for market-ready, or cash, cattle later this week appear promising based on the futures rally, still-profitable packer margins and far fewer cattle for sale than last week, said traders.

Cash cattle bids in Texas and Kansas stood at $125/cwt against $130 to $132 asking prices, said feedlot sources. Last week, cash cattle in the U.S. Plains brought $124 to $132.50.

Investors monitored surging U.S. grain prices, partly fueled by forecasts for extreme heat in parts of the U.S. Plains by the weekend.

Expensive feed may later cause cattle feeders to cut production, while hot sultry weather tends to slow down animal weight gains.

Live cattle futures buying and sharply higher cash feeder cattle prices boosted CME feeder cattle contracts. August closed 1.925 cents/lb. higher at 147.375 cents.

Hog market ends higher

CME lean hogs drew strength from a wholesale pork price turnaround and live cattle futures’ steep climb, said traders.

Spot June closed up 0.2 cent/lb. to 82.05 cents, and July ended 0.75 cent higher at 87.025 cents.

Wednesday morning’s wholesale pork price jumped 92 cents/cwt from Tuesday to $87.26/cwt, USDA said.

Some grocers rounded out Father’s Day pork inventories while others stocked up on product to avoid potential shortages as hog supplies tighten seasonally, a trader said.

Traders bought deferred months and sold June ahead of its expiration on June 14. They also purchased back months in anticipation of higher corn prices and hot summer weather possibly trimming hog production.

“The changing feed environment is certainly bringing some support into the back end of the market,” said Archer Financial Services broker Dennis Smith.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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