Chicago | Reuters — U.S. live cattle futures closed higher on Tuesday for the first time in nine sessions as brisk demand for beef and a rally in lean hog futures prompted a round of bargain-buying, traders said.
Chicago Mercantile Exchange June live cattle settled up 0.6 cent at 119.2 cents/lb., and August feeder cattle futures rose 1.75 cents to end at 154.525 cents/lb. (all figures US$).
The June live cattle contract had closed lower in each of the previous eight sessions and dipped to 117.55 cents on Monday, close to its 100-day moving average and the contract’s lowest since March 5, before turning higher.
The market’s focus may have shifted back to bullish fundamentals that had lifted June cattle to a life-of-contract high on April 8.
“Beef demand is still very strong. With hog prices (rallying), guys were looking at cattle and saying ‘We’ve sold hard enough,’ and they started to cover shorts today,” said Dan Norcini, an independent livestock trader.
In the wholesale beef market, choice cuts of boxed beef rose $2.09, to $278.26/cwt, on Tuesday, hitting a 10-month high after appearing to plateau in recent days. Select cuts were up $1.34 at $270.47/cwt, according to the U.S. Department of Agriculture.
“You’ve got strong seasonal demand ahead of Mothers’ Day and Memorial Day. Everyone is stocking up ahead of that,” Norcini said, referring to retailers.
CME hog futures surged nearly two per cent on Tuesday, rallying for a second session after a profit-taking setback last week. Underlying fundamentals remain strong, including rising cash hog prices and brisk demand for pork.
CME June lean hog futures settled up 2.025 cents at 106.35 cents/lb.
The CME’s lean hog index, a two-day weighted average of cash prices, climbed to $103.76 per cwt, its highest since October 2014.
“These packers keep putting better money on the table. The action of the packers tells us they are competing for hogs, and the (hog) numbers don’t seem to be there,” Norcini said.
The U.S. pork cutout, an indication of wholesale pork prices, rose 95 cents to $115.03/cwt on Tuesday afternoon.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.