U.S. livestock: Fund buying extends CME live cattle gains

Chicago | Reuters –– Chicago Mercantile Exchange live cattle gained for a fourth straight day on Friday on short-covering and fund buying after futures broke through technical resistance levels, traders said.

April live cattle closed up 0.85 cents per pound to 144.85 cents, after topping the 10-day and 20-day moving averages of 144.255 and 144.756 cents (all figures US$).

June ended 0.575 cent higher at 135.775 cents. It surpassed the 40-day moving average of 135.751 cents.

CME live cattle drew more support from their discounts to expectations for this week’s cash or market-ready cattle prices, challenged by poor packer margins and the seasonal lull in wholesale beef demand.

Regardless of the cash price outcome, they will remain well above futures, said Oak Investment Group president Joe Ocrant.

Cash cattle bids in the U.S. Plains ranged from $146 to $147 per hundredweight (cwt) against $150 asking prices, feedlot sources said. A week ago, cash cattle sold at $148 in Texas and Kansas and at $150 in Nebraska.

The morning’s wholesale choice beef price fell $2.73/cwt from Thursday to $222.27. Select cuts dropped $1.34 to $212.96, based on U.S. Department of Agriculture data.

Beef packer margins for Friday were an estimated negative $122.85 per head, compared with a negative $120.15 on Thursday and a negative $88 a week ago, as calculated by Colorado-based analytics firm HedgersEdge.com.

April feeder cattle, which will expire on April 17, was guided by CME’s feeder cattle index at 178.30. Higher live cattle futures and lower corn prices lifted remaining CME feeder cattle contracts.

April closed 1.225 cent/lb. higher at 179.5 cents, and May ended up 0.4 cent at 180.075 cents. August finished 0.55 cent higher at 182.475 cents, and posted a new contract high of 182.775 cents.

Hogs rise on spreads

Most CME hog contracts gained modestly as traders bought back months and at the same time sold the April contract ahead of its expiration on Monday, traders said.

Investors who had been long April futures exited that contract as lower-trending cash hog prices brought CME’s hog index, at 127.79 cents, closer in line with futures.

April hogs closed down 0.25 cent/lb. at 124.925 cents.

June ended up 0.075 cent at 121.225 cents, and July finished at 117.55 cents, 0.25 cent higher.

Investors will closely monitor cash hog and wholesale pork prices heading into next weekend’s Easter holiday.

Cash hog prices may suffer into the middle of next week as some packers throttle back production during the holiday and to offset production losses from the fatal Porcine Epidemic Diarrhea virus, a trader said.

He said processors may resist raising cash bids as they work to improve their margins.

The morning’s average hog price in the western Midwest slipped 49 cents/cwt from Thursday to $119.67, and fell $1.53 to $119.11 in the eastern part of the region, according to the USDA.

HedgersEdge.com calculated beef packer margins for Friday at a negative 90 cents per head, compared with a negative $2.85 on Thursday and a negative $2.55 a week ago.

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

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