Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures offset recent losses and finished higher on Tuesday, driven by short-covering following the day’s choice wholesale beef price surge to an all-time high, traders said.
June closed up 0.4 cent per pound to 151.975 cents, and August was 0.575 cent higher at 150.6 cents (all figures US$).
Tuesday morning’s choice wholesale beef price jumped $3.85 per hundredweight (cwt) from Monday, to $266.77, topping the May 14 record of $264.74. Select cuts rose $1.26, to $251.68, the U.S. Department of Agriculture said.
A few retailers topped off Memorial Day and Father’s Day inventories with packers charging them more for product to boost their margins, traders and analysts said.
“Somebody needed beef for immediate shipment and paid for it, likely for Memorial Day,” said EBOTTrading.com senior analyst John Kleist.
Futures drew more support from their discounts to last week’s cash prices.
On Tuesday, market-ready (cash) cattle bids in Kansas surfaced at $157/cwt with no response from packers, industry sources said. Last week, cash cattle in the U.S. Plains sold at $160 to $161.
Investors expect packers to spend the same or less than last week for cattle due to more animals for sale and plant closures during the U.S. Memorial Day holiday (May 25).
CME feeder cattle drew support from lower corn prices, live cattle market buying and steady to $4 higher cash feeder cattle prices.
May, which will expire on Thursday, closed up 0.375 cent/lb. to 219.35 cents, and August 0.425 cent higher at 217.15 cents.
Cash woes weaken hog futures
CME lean hogs closed weaker in anticipation of lower cash prices, with packing plants needing less inventory ahead of Monday’s holiday, traders said.
June closed down 0.25 cent, to 82.15 cents, and July 0.55 cent lower at 82.175 cents.
Cash hogs in the Midwest Tuesday morning traded steady to $1/cwt lower than on Monday, regional hog dealers said.
Packers booked enough hogs at lower prices for the rest of the week while hiking costs for pork at wholesale, which returned their margins to the black.
Tuesday’s pork packer margins were at a positive 60 cents per head, compared with a negative $3.05 on Monday, according to HedgersEdge.com.
Separate government data quoted the morning’s wholesale pork price at $86.21/cwt, $1.82 higher than on Monday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.