Chicago Mercantile Exchange (CME) live cattle futures rose on Wednesday in anticipation of steady-to-higher cash cattle prices, said traders and analysts.
June futures at times led advances due to its discount to last week’s cash cattle prices.
CME live cattle punched through key technical resistance levels, which triggered fund buying.
Spot April live cattle closed up 0.725 cent per pound to 126.925 cents and above support at the 20-day moving average of 126.62 cents (all figures US$).
Most-actively traded June ended at 122.075 cents, 1.25 cents higher. It closed above the 20-day moving average of 121.75 cents.
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U.S. livestock: Cattle futures come down from highs
Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
Investors are expecting cash cattle to trade at $126 to $127 per hundredweight (cwt), compared with last week’s mostly $126.
“Packers backed themselves into a corner by not building up inventories over the past few weeks,” a trader said. “The only drawbacks to cash are poor packer margins and wet cool weather postponing spring cookouts.”
The U.S. Department of Agriculture on Wednesday morning quoted the average wholesale choice beef price at $191.30/cwt, down 11 cents from Tuesday; select cuts jumped $1.24, to $185.02.
U.S. beef packer margins on Wednesday were estimated at a negative $37.50 per head versus a negative $41.55 on Tuesday and a negative $45.35 a week ago, according to HedgersEdge.com.
Fund buying and the live cattle market’s climb pulled up most CME feeder cattle contracts.
Spot April feeders, which will expire on April 25, settled unchanged at 133.75 cents.
May closed at 141.1 cents, up 1.5 cents. And most-actively traded August finished 2.5 cents higher, at 150.625 cents.
Fund buying lifts hogs
Fund buying lifted CME hogs on Wednesday, according to analysts and traders.
Investors expect packers to raise cash hog bids the rest of the week based on profitable packer margins and prospects for good demand for pork for backyard grills.
“A seasonal drop in hog numbers and the start of spring grilling, both should happen soon, could help cash prices,” a trader said. “We’re not quite there yet based on current weather, hog weights and slaughters,” he said.
Wednesday morning’s government data showed the average hog price in the western Midwest down $1.53/cwt from Tuesday at $78.01, but up 78 cents at $74.64 in the eastern Midwest.
The Wednesday morning USDA mandatory wholesale pork price, calculated on a plant-delivered basis, was $85.44/cwt, down 14 cents from Tuesday.
USDA’s weekly weight data showed hogs in the Iowa/southern Minnesota market last week averaged 277.1 lbs., up 0.6 lb. from the week before and up 0.2 lb. from a year earlier.
From Monday to Wednesday, packers processed 1.256 million hogs, up 5,000 from last week and 19,000 more than a year ago, according to USDA.
CME June hogs settled up 1.425 cents at 91 cents/lb., finishing well above the 20-day and 40-day moving averages, both of which were 90.37 cents.
July hogs closed at 91.425 cents, 1.4 cents higher. It settled above the 20-day and 40-day moving averages of 90.45 and 90.55 cents, respectively.
— Theopolis Waters is a Reuters reporter in Chicago.
