Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed sharply higher on Monday, with the August contract up the three-cent per pound daily price limit, helped by buy stops and fund buying, said traders.
They said Monday morning’s wholesale beef price upswing and back-month futures’ discounts to last week’s cash prices offset initial selling tied to Friday’s bearish U.S. Department of Agriculture monthly Cattle on Feed report.
June, which will expire on Friday, closed 2.275 cents/lb. higher at 121.475 cents (all figures US$). Most actively traded August finished limit up at 118.275 cents, and topped its 10-day moving average of 116.96 cents.
CME live cattle’s trading limit on Tuesday will be expanded to 4.5 cents following August’s settlement on Monday.
Market participants await this week’s sale of market-ready, or cash, cattle that a week ago brought $118-$123/cwt.
Packers are buying cattle for the U.S. July 4 holiday-shortened workweek as beef demand tends to subside this time of year, said traders and analysts.
Wednesday’s Fed Cattle Exchange sale of 2,554 animals could set the tone for remaining animals in the Plains. Last week, a small number of cattle at the exchange moved at $123/cwt.
Buy stops, technical buying and live cattle futures advances drove nearby CME feeder cattle contracts up their 4.5-cent price limit. The limit will be expanded to 6.75 cents on Tuesday.
August feeders ended limit up at 149.45 cents/lb.
Hogs finish firmer
CME lean hog futures’ discount to the exchange’s hog index for June 22 at 90.17 cents attracted buyers, said traders.
They said investors sold deferred months before Thursday’s USDA quarterly hog report and bought July — driving it to a new high for the contract.
July ended up 1.725 cents/lb. to 87.025 cents, and marked a new high of 87.725 cents. August closed up 0.025 cent to 78.675 cents.
Packers need fewer hogs before plants shut down during the holiday, which could reduce the amount of product available to retailers, a trader said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.