U.S. livestock: CME live cattle leap to one-month high

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Tuesday reached their highest level in a month, driven by short-covering and recent increase in wholesale beef values, said traders.

They added that some investors bought CME live cattle futures, and simultaneously sold lean hog contracts, in anticipation for possibly firmer cash cattle prices later this week.

Most actively traded December live cattle closed 2.2 cents/lb. higher at 105.525 cents (all figures US$).

Tuesday morning’s choice wholesale beef price rose $1.10/cwt from Monday to $185.86. Select cuts were up 69 cents, to $173.70, the U.S. Department of Agriculture said.

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“Fundamentally I think we’ve reached a point where we’re finally seeing a light at the end of the tunnel,” said West Oak Commodities analyst Tom Tippens. He cited “massive” packer margins, better beef demand and potentially tighter cattle numbers ahead.

Last week, packers in the U.S. Plains bought slaughter-ready, or cash, cattle for $104 to $105/cwt — up as much as $5 from the week before.

Average beef packer margins for Tuesday were a positive $107.75 per head, down from a positive $115.70 on Monday and a positive $136.20 a week ago, as calculated by HedgersEdge.com.

Market participants await the sale of 12,700 cattle at the Fed Cattle Exchange (FCE) on Wednesday morning that could set the tone for remaining cash transactions in the Plains.

“There’s a lot of eyeballs on that FCE screen when those auctions start. So, it’s having a material effect on psychology and how producers view it,” said Tippens.

CME live cattle future’s rally and strong cash feeder cattle prices sent the exchange’s feeder cattle contracts up sharply.

November feeders finished up 4.325 cents/lb. higher at 126.175 cents.

Lower hog futures settlement

Sell stops and profit-taking ended CME lean hogs’ three-day win streak, traders said.

December lean hogs closed 1.5 cents/lb. lower at 46.45 cents.

Investors are keeping close tabs on abundant supplies that could hurt cash returns and discourage grocers from buying product at current prices.

Tuesday morning’s wholesale pork price rose $1.32/cwt, to $75.34 from Monday, USDA said.

Tuesday morning’s cash hog prices in the U.S. Midwest were unchanged, said regional hog merchants.

Monday and Tuesday’s combined hog slaughter totaled 900,000 head, 33,000 more than the same period a year ago, according to U.S. government estimates.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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