U.S. livestock: Strong cash prices rally CME live cattle

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle finished higher on Thursday in response to stronger-than-expected prices for market-ready or cash cattle, traders said.

Cash cattle in Texas and Kansas moved at $150 per hundredweight (cwt), up $2 from last week, according to feedlot sources (all figures US$).

Investors had anticipated weaker cash returns given Wednesday’s cattle trade in Nebraska of $146/cwt, steady to $2 lower than a week earlier.

“The live cattle market continues to have tight supplies and strong beef demand and the board has reacted to that,” said Linn Group analyst John Ginzel.

Thursday morning’s wholesale choice beef price, or cutout, gained $1.16/cwt from Wednesday to $240.70. Select cuts were up $1.14 to $233.19, the U.S. Department of Agriculture said.

Reduced packing plant kills and retailers buying beef for U.S. July 4 cookouts lifted the cutout, a trader said.

August live cattle led advances after traders bought that month and simultaneously sold July futures in a trading strategy known as bear spreading.

CME live cattle slipped from highs as investors took profits before Friday’s USDA monthly cattle-on-feed report.

The report is expected to show fewer cattle likely entered feedlots last month than a year ago.

June ended at 148 cents, up 2.1 cents, and August 2.45 cents higher at 147.475 cents.

CME feeder cattle closed sharply higher, with some contracts up the three-cent daily price limit, supported by fund buying and live cattle futures advances.

August finished 2.7 cents/lb. higher at 207.55, and September three cents higher at 208.575.

Hogs up with cash prices

CME hogs closed higher, help by cash and wholesale pork price gains, traders said.

The morning’s prices for slaughter-ready, or cash, hogs in the Midwest were steady to $1/cwt higher, according to hog dealers.

USDA data showed Thursday morning’s wholesale pork price at $126.35/cwt, up 18 cents from Wednesday.

Processors are buying supplies for early next week, while retailers purchase pork to feature for summer grilling, they said.

Short-covering after Wednesday’s losses and fund buying offered more market support.

Anticipation of tight supplies ahead in the wake of the porcine epidemic diarrhea virus boosted deferred CME hog contracts.

Despite this week’s USDA approval of a PEDv vaccine, U.S. veterinarians warned of further outbreaks during the fall.

“One gets the distinct idea that the way those distant months are now trading, the board believes the vaccine will not work at all,” said independent livestock futures trader Dan Norcini.

July closed up 2.625 cents at 128.05, and August 2.475 cents higher at 129.75.

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

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