Chicago | Reuters — Chicago Mercantile Exchange live cattle rose on Wednesday, driven by anticipation of higher cash prices this week, traders said.
For now, there is more confidence in better prices for cash cattle given record-high beef values and positive packer margins, said R.J. O’Brien floor manager Jim Brooks.
Cash cattle bids in Texas and Kansas were at $146 per hundredweight (cwt) with no response from sellers, feedlot sources said. Last week, cash cattle in Texas and Kansas moved at $148 per cwt and $150 in Nebraska.
The afternoon’s wholesale choice beef price, or cutout, rose four cents per hundredweight (cwt) from Tuesday to a record-high $241.51. Select cuts dropped 95 cents to $236.76, based on U.S. Department of Agriculture data.
Beef packer margins for Wednesday were estimated at a positive $22.55 per head, the first time in the black since $12.30 on Jan. 31, as calculated by HedgersEdge.com.
Funds in CME’s livestock markets sold their April long positions and bought back months in a process known as the “roll” by followers of the Goldman Sachs Commodity Index (S+PGSCI). Wednesday was the fourth of five days for the S+PGSCI procedure.
Traders and analysts cited a USDA report on Wednesday forecasting grain planting for Ukraine this year through 2015. Uncertainty regarding tension between Russia and Ukraine, particularly in Crimea which is noted for wheat production, roiled U.S. grain markets. [Related story]
The Crimea region is known for wheat output, but is a more significant producer of meat than grains, the report said.
April live cattle closed 0.65 cent per pound higher at 143.875 cents, and June ended at 136.675, up 0.575 cent.
CME feeder cattle drew support from higher live cattle futures.
March ended up 0.05 cent/lb. at 173.975 cents, and April closed 0.3 cent higher at 175.875 cents.
Mixed hogs as funds roll
The “roll” by funds pressured April CME hogs but propped up June and July futures, traders said.
Despite profit-taking, anticipation of reduced hog numbers as the deadly porcine epidemic diarrhea virus (PEDv) sweeps through U.S. hog farms helped underpin summer hog contracts.
“We saw some violent swings in market. But, fundamental news is still fantastic and looks positive for next week,” said JBS Trading president James Burns.
Packers actively competed for hogs, and processors stocked up on pork, to offset potential PEDv-related supply shortages during the spring and summer grilling season, traders said
The afternoon’s hog price in the closely-watched Iowa/Minnesota market was $112.70/cwt, $2.78 higher than on Tuesday, based on USDA data.
USDA data showed the morning’s price of wholesale pork at $120.60/cwt, topping Tuesday’s $117.53 record.
From Monday to Wednesday, packers processed 1.237 million hogs, down 27,000 from last year, according to USDA.
April closed 1.175 cents/lb. lower at 115.925 cents, and June finished up 0.375 cent to 125.325 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.