U.S. livestock: CME live cattle rise on discounts to cash prices

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Monday, supported by their discount to what packers paid for market-ready (cash) cattle last week, traders said.

“We had the board (futures) too cheap when the February contract expired last Friday,” said Vetterkind Cattle Brokerage president Troy Vetterkind.

April closed 1.75 cents higher at 153.45 cents, and June up 1.95 cents at 145.8 cents (all figures US$).

Last week, cash cattle in Kansas and Nebraska sold at mostly $158 to $160 per hundredweight (cwt), steady to $2 lower than the week before.

Rough weather forced some processors to spend at least steady money for supplies, while others lowered bids to boost their margins and wholesale beef values.

Monday morning’s choice wholesale beef price rose 79 cents/cwt, to $248.37, from Friday. Select cuts dipped 10 cents to $245.47, the U.S. Department of Agriculture said.

April and June gained further after earlier piercing their respective 40-day moving average of 153.07 cents and 145.86 cents, which triggered buy stops and fund buying.

June futures led the charge after funds sold, or rolled, some of their April long positions and at the same time bought the June contract.

Investors implemented the trading strategy ahead of similar moves later in the week tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).

CME live cattle gains, chart-related buying and lower corn futures perked up the exchange’s feeder cattle contracts.

March closed 2.2 cents/lb. higher at 204.1 cents, and April up 1.8 cents, to 202.125 cents.

Hogs firm after choppy session

CME lean hogs gained modestly in choppy trading on technical buying and buy stops, traders said.

Profit-taking and uncertainty about cash and wholesale pork prices in the near term limited futures advances, they said.

April futures closed up 0.2 cent/lb. to 67.675 cents, with May 0.4 cents higher at 80.3 cents.

Cash hogs in the Midwest on Monday morning traded steady with Friday’s prices, regional hog dealers said.

USDA data showed the morning’s wholesale pork price was up seven cents/cwt from Friday, to $70.58.

Packers may cut kills to conserve their margins, drive up wholesale pork values and avoid spending more for hogs.

But more wintry weather moving eastward across the U.S. Midwest could reduce livestock availability, while further hampering U.S. East Coast meat consumption.

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

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