Chicago Mercantile Exchange live cattle climbed Thursday on fund buying after futures broke through key technical resistance levels, traders and analysts said.
August live cattle finished at 122.100 cents, or
0.800 cent per lb higher. It ended above where the 20-day and 100-day moving average converged at 121.883 cents. October closed at 126.475 cents, or 1.225 cents higher and above the 100-day and 20-day moving averages of
125.824 cents and 125.663 cents, respectively.
Sentiment that futures have bottomed out seasonally contributed to futures advances, analysts and traders said. Investors tweaked positions before the U.S. Department of Agriculture’s monthly cattle-on-feed report on Friday.
Analysts expect the data to show cattle placements in June dropped as ample grazing land kept animals out of feedyards longer.
CME live cattles’ upswing and firm wholesale beef prices may underpin cash cattle prices.
“Packers are short-bought cattle. And a break in the heat wave in sections of the country over the weekend might rekindle grilling demand,” a trader said.
Cash cattle bids in the U.S. Plains were at $117 to $119 per cwt against asking prices of $121 and higher, said feedlot sources. Cash-basis cattle last week moved at $119 to $120.
The U.S. Department of Agriculture on Thursday morning reported the wholesale price of choice beef at $189.91 per hundredweight (cwt), which was up 47 cents from Wednesday. Select cuts gained 36 cents to $184.14 cents.
CME feeder cattle drew support from CME live cattle market gains and weaker corn futures. Cheaper corn may increase feedlot demand for young cattle.
August CME feeder cattle closed at 152.075 cents, up
1.100 cents per lb and September at 155.050 cents, or
1.100 cents higher.
HOGS RISE ON DISCOUNT
CME hog futures’ discount to the exchange’s hog index at
101.88 cents encouraged buyers, analysts and traders said.
“The only reasons to buy futures would be the discount to cash and August holding above chart levels,” said Archer Financial Services broker Dennis Smith. He cited lower cash hog and wholesale pork prices as negative futures influences.
Government data showed the average hog price on Thursday morning in the eastern Midwest hog market at $92.33 per hundredweight (cwt), $2.79 lower than Wednesday.
Thursday morning’s USDA mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $100.01 per cwt, down $1.23 from Wednesday.
Hogs held back on farms to avoid heat stress on their way to packing plants could come to market soon. Thin operating margins reduced packer demand for supplies.
And hot weather engulfing much of the United States dampened outdoor barbecues which dragged down wholesale pork prices.
August futures led advances as spread traders bought the contract and sold far months as corn prices slipped. Hog farmers may feed more hogs and fatten them to heavier weight if corn costs continue to come down.
August closed 0.825 cent per lb higher at 96.625 cents and October at 85.625 cents or up 0.350 cent.