Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled mostly higher on Monday after investors sold the December contract and simultaneously bought deferred months in a market strategy known as bear-spreading, said traders.
The spreads, along with modest positioning before Friday’s U.S. Department of Agriculture monthly Cattle on Feed report, lifted some back-months to four-month highs.
December live cattle closed down 0.375 cent/lb. to 111.95 cents (all figures US$). Most actively-traded February ended 0.575 cent higher at 115.925 cents and April finished 0.525 cent higher at 114.125 cents.
Market participants awaited prices for slaughter-ready, or cash cattle, later this week. Packers will buy supplies for the Christmas and New Year’s holiday-shortened work weeks.
Last week, cash cattle in the U.S. Plains moved at $112/cwt, compared to $109 to $112 a week earlier. They were supported by better-than-expected wholesale beef demand that enhanced packer profits.
Monday morning’s choice wholesale beef price was $1/cwt higher than on Friday at $195.63. Select cuts climbed $1.60, to $182.69, USDA said.
Supermarkets and restaurants may have purchased beef to avoid potential shortages when plants shutdown for the year-end holidays, said analysts and traders.
Buy stops, technical buying and back-month live cattle market advances again drove CME feeder cattle to a 3-1/2-month high. January feeders closed 0.975 cent/lb. higher at 130.875 cents.
Hog futures mostly higher
Buy stops and technical buying sent some nearby CME lean hog contracts to five-month highs, despite a weaker cash price outlook, said traders.
Market participants also bought nearby months and at the same time sold deferred contracts in a trading strategy known as bull spreads.
February hogs ended 1.4 cents/lb. higher at 66.1 cents, and April up 0.375 cent, to 68.675 cents.
“Hogs that didn’t make it to packing plants last weekend because of weather were pushed into this week’s kill, which isn’t bullish,” a Midwest hog merchant said.
Processors will also need fewer pigs as they schedule plant closures during the upcoming holidays.
USDA revised last Saturday’s estimated hog slaughter downward from 341,000 to 308,000 head.
Monday morning’s cash hog prices in Iowa/Minnesota averaged $53.60/cwt in light volume, down 62 cents from Friday, USDA said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.