Chicago/Reuters – Chicago Mercantile Exchange live cattle contracts rose on Friday, paring recent losses as investors pulled futures closer in line with expectations for cash prices later on Friday, traders said.
April closed 0.900 cent per lb higher at 136.350 cents, and June ended up 0.850 cent to 126.475.
“We’re just playing catch up to where we think cash will trade based on the bids out there,” a trader said.
Packers in the U.S. Plains bid $135 to $136 per cwt for market-ready, or cash, cattle versus asking prices up to $142, said feedlot sources. A week earlier, cash cattle sold at $133 to $137, said feedlot sources.
The rebound in futures and wholesale beef values might underpin some cash prices, but others may draw pressure due to poor packer margins, traders and analyts said.
The afternoon’s wholesale choice beef price jumped $1.22 per cwt from Thursday to $220.97. Select cuts were up 35 cents to $211.99, the U.S. Department of Agriculture said.
Friday’s average beef packer margin was a negative $55.90 per head, down from a negative $49.05 on Thursday and a negative $24.70 last week, as calculated by HedgersEdge.com.
Funds periodically sold, or “rolled,” some of their April long positions into deferred contracts before similar moves early next week.
Monday will begin the first of five days for some funds trading in CME’s livestock markets to shift April positions mainly into June. The process is tied to the Standard & Poor’s Goldman Sachs Commodity Index (S&PGSCI).
USDA on Friday said it was suspending its twice-yearly Cattle Inventory report due in July, citing budgetary reasons.
CME feeder cattle drew strength from live cattle market advances. March closed 0.900 cent per lb to 158.500 cents.
Strong hog futures close
Short-covering and live cattle market gains boosted CME lean hogs despite bearish fundamentals, said traders.
April closed up 0.450 cent per lb to 70.800 cents, May ended 0.550 cent to 77.325 cents.
Friday afternoon’s average cash hog price in Iowa/Minnesota dropped 40 cents per cwt from Thursday to $63.27, the USDA said.
The afternoon wholesale pork price on Friday slipped 21 cents per cwt from Thursday to $75.22, based on government data.
Packers and grocers have adequate inventories going into next week, when warmer temperatures may cause hogs to gain weight faster, said traders and Midwest hog buyers.
This could allow early delivery of pigs to packers while increasing pork tonnage.