Chicago | Reuters — Most Chicago Mercantile Exchange live cattle contracts landed in positive territory on Monday, after investors bought deferred months and simultaneously sold June futures in a trading strategy known as bear spreading, traders said.
June live cattle closed down 0.4 cent/lb. at 123.025 cents (all figures US$). August ended up 0.75 cent, to 119.475 cents, and October 0.925 cent higher at 118.9 cents.
“It’s just spread activity or longs moving some of their positions into the back months,” West Oak Commodities analyst Tom Tippens said, referring to the day’s futures action.
Anticipation of more cattle coming to market in the weeks ahead further pressured the June contract, which received downside support from its discount to last week’s cash prices.
Futures’ discount to last week’s cash prices, along with much-improved wholesale beef demand ahead of the U.S. May 30 U.S. Memorial Day holiday, also minimized June futures’ losses.
Last week, market-ready, or cash, cattle in the U.S. Plains fetched $132 to $135/cwt, up from mostly $128 the week before.
The choice beef price, or cutout, on Monday morning was $221.99/cwt, a $3.43 jump from Friday. Select cuts rose $2.30, to $208.25, according to U.S. Department of Agriculture data.
Short-covering, technical buying and CME live cattle futures advances boosted the exchange’s feeder cattle contracts. August ended up 1.6 cents/lb. at 148.65 cents.
Higher hog market close
Spillover support from the exchange’s neighboring live cattle markets pulled up CME lean hogs, traders said.
Spot-June closed 1.075 cents/lb. higher at 83.025 cents, and July ended 0.85 cent higher at 83.4 cents.
Fund buying developed after both contracts surpassed their respective 10-day moving average of 82 and 82.67 cents.
Traders said the morning’s wholesale pork price bounce, after some processors last week reduced slaughters to protect their thin margins, contributed to hog futures’ advances.
Monday morning’s wholesale pork price, or cutout, at $83.36/cwt had climbed 86 cents from Friday, according to USDA data.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.