Chicago | Reuters — Chicago Mercantile Exchange live and feeder cattle futures gained about one per cent on Monday, rebounding from earlier losses on support from a round of bargain buying, traders and analysts said.
Feeders fell to a 3-1/2-week low before reversing higher, while live cattle tested Friday’s multiweek low and then turned higher to finish near their session peaks. Lean hogs also were mostly higher.
The livestock futures were buoyed, in part, by index fund rebalancing in which funds were expected to adjust their portfolios this week and buy small amounts of futures contracts of many commodities. Traders also were selling front-month cattle and hog contracts and rolling into deferred contracts.
CME February live cattle futures settled 1.7 cents higher at 116.525 cents per pound, rising above their 10- and 20-day moving averages (all figures US$). CME March feeder cattle gained 1.7 cents to settle at 125.5 cents per pound.
The cattle gains despite declines in wholesale beef prices amid worries that severe weather in the U.S., from flooding on the West Coast to snow and ice on the East Coast, Midwest and Plains. The weather could both prevent consumers from buying goods such as meat at stores and slow or halt transportation of food on trucks and trains.
The U.S. Department of Agriculture after the close of futures trading said choice-grade wholesale beef prices were down $1.46, at $197.35/cwt, lowest in about two weeks.
“The beef market is going down. I think the board (CME) knows that. The cattle market is probably a little underpriced,” said a cattle futures broker who was not authorized to speak for attribution.
USDA said wholesale pork prices were up 85 cents at $79.86/cwt, led by gains in pork belly prices that rose to the highest levels since July.
Front-month February lean hog futures edged 0.225 cent lower, to 63.75 cents/lb., while all other deferred contracts gained. The April contract was up 0.175 cent at 68.375 cents as traders sold February and bought April contracts, with April likely to become the most active contract as early as Tuesday.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.