Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures settled higher on Tuesday after a choppy session, lifted by short-covering in response to strong wholesale beef quotes, traders said.
December closed 0.65 cent per pound higher at 170.15 cents; February rose one cent, to 171.025 cents (all figures US$).
Tuesday morning’s choice wholesale beef price was up 47 cents per hundredweight (cwt) from Monday to $256.17. Select jumped $2.25 to $244.50, the U.S. Department of Agriculture said.
Plant closures during the U.S. Thanksgiving holiday could reduce beef to grocers gearing up to advertise roasts and ribeyes during the winter, traders and analysts said.
Futures’ discounts to last week’s record prices for market-ready, or cash, cattle, and possibly steady or better cash prices this week, encouraged buyers.
Despite their poor markets, packers need supplies for post-Thanksgiving production, a trader said.
Last week, some cash cattle in the U.S. Plains sold for as much as $174/cwt, which topped the prior week’s record of $172.
Beef packer margins for Tuesday were a negative $109.65 per head, compared with a negative $84.80 on Monday and a negative $78.05 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
CME feeder cattle futures felt continued pressure from Monday’s steep losses, technical-related selling and higher corn prices.
January closed 1.975 cents/lb. lower at 231.375 cents, and March at 229.925 cents, down 1.525 cents.
Hogs erase gains
CME lean hogs ended lower on profit-taking and fund liquidation that beat back initial advances, traders said.
December closed down 0.375 cent/lb. at 90.95 cents, and February fell 0.675 cent to 89.825 cents.
Participants on both sides of the market squared positions in preparation for extended holiday vacations, which stirred market volatility, a trader said.
Investors await clear fundamental direction in anticipation of an impending seasonal bottom in cash prices as grocers have plenty of winter holiday ham inventories.
The morning’s average hog price in the Iowa/Minnesota market was down 38 cents/cwt from Monday in thin volume at $86.23, according to USDA.
However, slaughter hogs in the Midwest moved at mostly steady to up 50 cents/cwt, according to regional dealers.
Separate government data showed the morning’s wholesale pork price rose 60 cents per cwt from Monday to $94.01 cents, led by the $3.45 higher cost for ribs.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.