U.S. livestock: CME live cattle, hogs end higher after volatile session

(CMEGroup.com)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures settled higher on Tuesday after a choppy day, partly supported by rising wholesale beef values, traders said.

Tuesday morning’s choice wholesale beef price climbed $1.28 per hundredweight (cwt) from Monday to $260.85/cwt (all figures US$). Select cuts gained 20 cents to $248.30, the U.S. Department of Agriculture said.

Grocers paid more for beef after packers hiked its cost and cut production to conserve their slimmer but still profitable margins, traders and analysts said.

The day’s beef packer margins were a positive $9.25 per head, compared with a positive $22.10 on Monday, according to HedgersEdge.com.

Futures’ discounts to last week’s market-ready (cash) cattle prices stirred periodic buying, traders said.

Last week, cash cattle in the U.S. Plains sold at $161 to $164/cwt, industry sources said.

Caution about subsequent cash price direction, given the seasonal supply buildup, at times weighed on futures, they said.

“The tug of war between packers and feedlots continues despite the latest USDA feedlot inventory numbers showing feedlot supplies were a bit larger than expected and steady with a year ago,” Len Steiner wrote in his Daily Livestock Report newsletter.

June and August ignited fund buying after they surpassed their respective 40-day and 10-day moving averages of 150.74 cents and 148.92 cents.

June ended 1.225 cents/lb. higher at 151.475 cents, and August up 0.85 cent to 149.65 cents.

CME feeder cattle May futures was helped by higher live cattle futures. Technical selling pressured remaining contracts.

May closed 0.925 cent/lb. higher at 217.7 cents, August 0.975 cent lower at 216.45 cents and September finished down 1.125 cents to 215.325 cents.

Hogs up with fundamentals

Surging cash and wholesale pork values boosted CME lean hogs that fluctuated throughout the morning, traders said.

USDA reported Tuesday morning’s average cash hog price in Iowa/Minnesota up $1.11/cwt from Monday, to $81.02.

Separate government data quoted Tuesday morning’s wholesale pork price at $82.29/cwt, $1.29 higher than on Monday

Packers will raise cash bids as long as supplies tighten seasonally and they can charge wholesalers more for product, traders and analysts said.

Some uncertainty exists regarding the pork sales outlook once the rush for Memorial Day meat orders decline, said Steiner.

May hogs closed up 0.6 cent/lb., to 81.3 cents/lb., and June 0.775 cent higher at 85.05 cents.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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