Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday reversed the prior day’s losses, with strength from technical buying and short-covering, said traders.
February live cattle closed 0.8 cent/lb. higher at 115.675 cents (all figures US$). April ended up 0.775 cent at 114.725 cents and above the 10-day moving average of 114.547 cents.
Funds have huge long futures positions, which means they may continue defending them or cause a steep decline when they try to get out of the market, said Oak Investment Group president Joe Ocrant.
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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.
Futures’ discounts to early-week prices for slaughter-ready, or cash, cattle contributed to market advances, said traders and analysts.
On Wednesday, a small volume of cash cattle in Nebraska traded at $116-$116.50/cwt, which was down from mostly $118 in the U.S. Plains last week, said feedlot sources.
And Wednesday morning’s Fed Cattle Exchange yielded $115.50-$117.25/cwt sales, compared with mostly $115-$116.75 last week.
Ample packer inventories and about 23,000 more cattle for sale than last week may weigh on prices for remaining animals in the Plains, said traders.
They added, however, that improved wholesale beef demand and still profitable packer margins might limit potential cash price losses.
Wednesday morning’s choice and select wholesale beef prices jumped $1.51/cwt from Tuesday to $204.84 and $195.08, respectively, the U.S. Department of Agriculture said.
Sell-stops, fund liquidation and firmer corn prices pressured CME feeder cattle futures.
January feeders closed 1.7 cents/lb. lower at 128.5 cents, after slipping below their 20-day moving average of 129.245 cents.
Higher hog futures close
Short covering and fund buying helped CME lean hogs partially recover from Tuesday’s selloff, said traders.
February hogs ended 1.1 cents/lb. higher at 64.6 cents, and April was up 1.075 cents at 67.975 cents.
Both contracts settled above their respective 10-day moving averages of 64.557 and 67.110 cents.
Still, some investors seem poised to sell futures based on their premiums to CME’s hog index for Dec. 30 at 57.47 cents, cash price uncertainty and the morning’s wholesale pork price setback.
Wednesday morning’s wholesale pork price dropped 99 cents/cwt from Tuesday to $79.55, USDA said.
The government’s Wednesday morning direct cash hog data was unavailable due to insufficient packer participation in reporting prices.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
