Chicago / Reuters – Chicago Mercantile Exchange live cattle contracts settled higher on Monday after short-covering and futures’ discounts to late last week’s cash prices offset early-session losses, traders said.
August live cattle ended 1.525 cents per lb higher at 112.450 cents, and finished above the 20-day moving average of 112.05 cents. October closed 0.775 cent higher at 110.625 cents.
“The shorts got a little nervous because the basis is starting to narrow some,” said Schwieterman Inc broker Domenic Varricchio. The basis refers to the difference between the futures market and cash prices.
Last Friday, market-ready, or cash, cattle in the U.S. Plains brought $117 per cwt, $3 lower than a week earlier, said feedlot sources.
Seasonally slack wholesale beef demand, more cattle for sale than the week before and the prospect of increased supplies in the coming months pressured last week’s cash prices, said analysts and traders.
They said processors might again attempt to control cash spending later this week as they struggle to sell beef that is competing with plentiful pork and chicken. And while rising temperatures move into the Plains could delay delivery of cattle to packing plants, it could also dampen grilling demand.
The morning’s choice beef price had fallen $1.73 per cwt to $202.98 from Friday. Select cuts dropped 48 cents to $191.90, the U.S. Department of Agriculture said.
In a trading strategy known as bull spreading, August futures led the rally after investors bought that contract and simultaneously sold deferred months.
Technical buying and live cattle futures turnaround drove up CME feeder cattle contracts. August feeders closed 1.600 cents per lb higher at 141.175 cents.
Lower hog futures close
CME lean hogs slid to a 2 1/2-month low led by eroding cash prices and soft wholesale pork values, said traders. August hogs finished down 0.100 cent per lb to 77.825 cents, and October ended 0.625 cent lower at 65.375 cents.
Midwest cash hog prices on Monday morning were $1 per cwt lower due to sufficient supplies, said regional hog merchants. Monday morning’s wholesale pork price slipped 22 cents per cwt from Friday to $90.07, said the USDA.
“Packers aren’t hurting for hogs and meat sales usually don’t do well in the summer,” a Midwest hog merchant said. Several deferred trading months sank to new lows for those contracts in anticipation of increased supplies ahead.