Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Wednesday on short-covering in response to the jump in wholesale beef values, traders said.
February closed up 0.575 cent per pound, to 159.175 cents, and April 1.9 cents higher at 152.625 cents (all figures US$).
Wednesday afternoon’s choice wholesale beef price rose 66 cents per hundredweight (cwt) to $239.78 from Tuesday. Select cuts surged $2.65, to $235.85, the U.S. Department of Agriculture said.
Grocers bought beef to avoid potential shortages amid seasonally tight supplies and as wintry weather across most of the country disrupted livestock production.
“Even though we’re growing cattle bigger, there’s still not enough of them out there,” said CHS Hedging analyst Steve Wagner.
CME live cattle futures’ discount, particularly the April contract, to last week’s cash prices encouraged buyers.
Last week, market-ready (cash) cattle in the U.S. Plains moved at $162-$163.50/cwt.
On Wednesday, cash bids surfaced in Kansas at $160/cwt versus $164 asking prices across the U.S. Plains, feedlot sources said.
Market bulls look for short-bought packers to spend steady or more money for cattle given current supply issues and higher wholesale beef prices.
Bearish investors cited extremely poor packer margins, West Coast port delays and the onset of Lent that tends to weaken meat demand.
Investors await USDA’s monthly cattle-on-feed report on Friday.
CME feeder cattle drew support from lower corn futures, live cattle market buying and higher cash feeder cattle prices.
March closed 1.65 cents/lb. higher at 203.1 cents, and April up 1.35 cents, to 202.075 cents.
Hogs end firmer
CME lean hogs finished moderately higher on bargain hunting in anticipation of cash hog prices possibly bottoming out in the near term, traders said.
April closed up 0.225 cent/lb., to 64.225 cents; May gained 0.25 cent, to 74.4 cents.
Wednesday afternoon’s average cash hog price in Iowa/Minnesota rose 49 cents/cwt from Tuesday to $57.15, USDA said.
Hogs are scarce in areas where arctic air forced farmers to keep swine buildings closed to retain heat, a trader said. But those delivery delays increased animal weight gains that will add to pork tonnage, he said.
Speculators bought deferred hog contracts in the belief that they are significantly undervalued relative to expectations for production during that period, traders and analysts said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.