U.S. livestock: CME live cattle limit up on improved fundamentals

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed up the three-cent-per-pound price limit Thursday, on higher wholesale beef values and better-than-expected subsequent cash prices, traders said.

April and June ended at 159.3 cents and 149.025 cents per pound (all figures US$). CME’s live cattle trading limit will be expanded to 4.5 cents on Friday following Thursday’s limit-up settlement.

“To see cash trading already $2 per hundredweight (cwt) higher today has definitely spurred some excitement,” said Top Third Ag Marketing analyst Craig VanDyke, citing disappointing cash prices on Wednesday and in recent weeks.

On Thursday, market-ready (cash) cattle in Kansas moved at $158/cwt, and $158-$160.50 in Nebraska, according to industry sources. On Wednesday, cash cattle in the U.S. Plains sold at $157-$158, they said.

Thursday morning’s choice wholesale beef price was at $260.27/cwt, up 21 cents from Wednesday. Select cuts jumped $1.67, to $251.19, the U.S. Department of Agriculture said.

Some packers held off buying cattle in anticipation of a seasonal bump in supplies, but others need them to replenish low inventories, traders said.

Positive packer margins, and futures’ rally on Thursday, emboldened some feedlots with unsold cattle to hold out for more money, they said.

Technical buying surfaced after June barely filled its chart gap, marked by last Friday’s 149 cents low and Monday’s 148.425 cents high.

Investors await USDA’s monthly Cattle on Feed report on Friday.

CME feeder cattle posted significant gains, with some contracts up the 4.5-cent price limit, following live cattle’s limit-up move.

The trading limit for feeder cattle will be increased to 6.75 cents on Friday.

April closed 1.725 cents/lb. higher at 214.275 cents. May and August finished up 4.5 cents, to 211.25 cents and 212.95 cents, respectively.

Hogs climb with pork prices

CME lean hogs closed sharply higher in response to a wholesale pork price bounce, traders said.

Short-covering, buy stops and fund buying contributed to futures advances, they said.

May closed 1.225 cents/lb. higher at 71.925 cents, and June was up 2.375 cents at 78.325 cents.

USDA data showed Thursday morning’s wholesale pork price surged $3.68/cwt from Wednesday, to $71.16.

Packers are cautiously buying hogs to conserve their margins while waiting for consistent wholesale pork demand to develop.

“If we really want to move this cash market, we’ve got to pick it up in the product market,” said VanDyke.

Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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