Chicago | Reuters –– Most Chicago Mercantile Exchange live cattle contracts gained modestly on Monday, after investors sold April and simultaneously bought deferred months in a strategy known as bear spreading, traders said.
April ended 0.5 cents/lb. lower at 139.3. June closed up 0.275 cent/lb. to 128.825 and August finished 0.4 cent higher at 123.6 (all figures US$).
Some market participants sold April futures that were overvalued compared to last week’s market-ready, or cash, cattle sales of $138/cwt, said independent livestock futures trader Bill Cipolla. The week before, U.S. Plains cash cattle brought mostly $136.
Packers last week requested cattle for immediate delivery, suggesting they were short on inventory which might be the case again this week, a trader said.
He said expectations for fewer cattle in the weeks ahead and supermarkets purchasing beef to advertise in early April are supportive cash price factors.
The morning’s wholesale choice beef price jumped $1.72/cwt from Friday, to $225.77. Select cuts rose 70 cents, to $215.82, the U.S. Department of Agriculture said.
Profit-taking and firm corn prices weighed on CME feeder cattle futures. March closed down 0.35 cent/lb. to 162.05 cents.
Lower hog market settlement
CME lean hog future’s premium to the exchange’s hog index for March 10, at 66.66 cents, deterred buyers, traders said.
April led losses, pressured by bear spreading, a strategy futures traders use to profit from a decline in commodity prices while limiting losses, and initial fund selling after the contract slipped below the 10-day moving average of 70.84 cents.
April closed 1.05 cents/lb. lower at 70.775 cents, and May ended down 0.35 cent at 78.9 cents.
Market participants exercised caution while awaiting clear cash price direction following the morning’s bump in wholesale pork values.
Packers might be more willing to raise cash bids if they could sell product, a trader said.
Wholesale pork early Monday rose 74 cents/cwt from Friday, to $76.82, helped by the almost $4 increase in rib costs, USDA said.
Cash hogs around the U.S. Midwest on Monday morning sold steady to 50 cents/cwt lower as supplies were sufficient for early-week production, dealers said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.