Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled higher after Tuesday’s choppy session, supported by the wholesale beef price upswing that trumped initial selling, traders said.
February closed 0.55 cent per pound higher at 153.75 cents, and April up 0.975 cent, to 150.575 cents (all figures US$).
Tuesday morning’s choice wholesale beef price rose $1.46 per hundredweight (cwt) from Monday, to $244.07. Select jumped $2.28, to $237.88, the U.S. Department of Agriculture said.
Recent wintry weather in the U.S. Plains decreased the number of cattle available to packers, which forced retailers to compete for beef, analysts and traders said.
Wholesale beef prices may have bottomed out, but more than one day of gains are needed before reaching that conclusion, a trader said.
Ongoing West Coast port congestion, and sporadic snow storms across the eastern U.S., curbed meat sales, he said.
Fund buying developed after February and April returned above the 10-day moving average of 152.93 cents and 150.6, respectively.
Futures’ discounts to last week’s market-ready (cash) prices stirred more buying.
Investors look for packers to spend steady or less money for slaughter-ready or cash cattle this week given their fading margins, lukewarm beef demand and more animals for sale.
Last week, cash cattle in the U.S. Plains moved at mostly $158-$160.50/cwt.
CME feeder cattle closed lower, pressured by sell stops and sharply higher corn prices.
March closed 1.2 cents/lb. lower at 199.5 cents, and April down one cent, to 199.9 cents.
Feb. hogs firm, others weak
CME’s February lean hogs contract finished higher on bull spreads that consisted of investors who bought it and simultaneously sold back months.
February closed 0.875 cent/lb. higher at 67.2 cents, April down 0.05 cent, to 70.875 cents, and May 0.350 cent weaker, to 79 cents.
February’s discount to cash prices encouraged buyers, even though many packers are snug on near-term inventories, traders and analysts said.
Government data on Tuesday showed packers processed 433,000 hogs, 16,000 more than last week.
Packers will resist paying more for hogs until they can sell the meat at wholesale, a trader said.
Tuesday morning’s average cash hog price in Iowa/Minnesota was down $1.30/cwt from Monday, to $64.37, the USDA said.
Separate government data showed the morning’s wholesale pork price was at $76.49/cwt, down $1.99 from Monday.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.