U.S. livestock: More gains for CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday gained for a fourth day in a row, after technical buying and futures’ discounts to last week’s cash prices offset early-session selling, traders said.

June live cattle closed 1.075 cents/lb. higher at 117.45 cents, and August ended up 0.95 cent at 115.3 cents (all figures US$). Both contracts broke through their 10-day moving averages of 116.42 cents and 113.64 cents, respectively.

Last week, market-ready, or cash, cattle in the U.S. Plains sold at $124/cwt.

Fallen wholesale beef values slashed profit for packers, who may be willing to pay at least steady money for cattle this week if beef demand at wholesale improves soon.

Wednesday morning’s wholesale choice beef price, or cutout, was up two cents/cwt from Tuesday to $205.96. Select cuts fell 80 cents, to $196.22, the U.S. Department of Agriculture said.

The average beef packer margin for Wednesday was estimated at a positive $4 per head, down from a positive $30.35 on Tuesday, as calculated by HedgersEdge.com.

Technical buying, buy-stops and live cattle market advances drove up CME feeder cattle futures. May finished 1.525 cents/lb. higher at 144.925 cents.

Hogs end win streak

CME lean hogs closed lower for the first time in six sessions, weakened by profit-taking and futures’ hefty premiums to the exchange’s hog index for May 2 at 71.77 cents, said traders.

Thinly traded May and most-active June closed 1.1 cents/lb. lower at 77.375 and 81.825 cents, respectively.

The morning’s weak wholesale pork value and inconclusive cash prices kept futures market participants off-balance.

Regional hog dealers quoted the morning’s cash hog prices in the Midwest steady to up 50 cents/cwt due to tight supplies. Prices on the government’s morning direct hog market report were unquoted.

Wednesday morning’s wholesale pork price, or cutout, at $82.20 was down 37 cents/cwt from Tuesday, led by the more than $15 tumble in pork belly prices, according to USDA data.

Analysts and traders were skeptical of the government’s morning pork cutout data because it is not as comprehensive as the afternoon report.

It is possible that belly demand has hit a wall, said Doane Advisory Services economist Dan Vaught. But it would not be surprising if the price is down only slightly, or even higher, later on Wednesday or early Thursday, he added.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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