U.S. livestock: CME live cattle rebound on short-covering

Chicago | Reuters — Chicago Mercantile Exchange live cattle closed higher on Monday, supported by short-covering before the final trading session of the quarter on Tuesday, analysts said.

June, which will also expire on Tuesday, finished 1.275 cents/lb. higher at 149.675 cents, and August up 1.35 cents, to 149.875 cents (all figures US$).

“I think short-covering really is the dominant part of the mix,” said AgriVisor Services senior market analyst Dale Durchholz.

Some investors were encouraged by fewer cattle for sale this week and late Friday’s cash cattle prices that were higher than earlier in the week.

A week ago, market-ready (cash) cattle in the U.S. Plains fetched $147 to $149/cwt, feedlot sources said.

Still, investors remain cautious about beef demand that typically decline as summer temperatures rise.

Furthermore, some shoppers may consider switching from pricy beef to less-costly pork and chicken, traders said.

Monday morning’s wholesale choice beef price dropped 52 cents/cwt from Friday to $252.60. Select cuts rose $1.19, to $249.34, the USDA said.

Short-covering and live cattle futures buying drove up CME feeder cattle contracts.

August closed 1.825 cents/lb. higher at 219.075 cents/lb.

Hogs mixed after USDA report

In a trading strategy known as bear spreading, CME lean hog investors sold nearby contracts and simultaneously bought deferred months following Friday’s USDA quarterly hog report, traders said.

Friday’s report showed further hog herd expansion in the March-May quarter, which was tempered by weaker hog prices at that time.

July hogs closed 1.2 cent/lb. lower at 74.25 cents, and August down 1.05 cents to 71.775 cents. October ended 1.325 cents higher at 64.65 cents, and December up 1.825 cents, to 63.05 cents.

The July contract was further pressured by plentiful supplies ahead of packing plant closings for at least one day during the U.S. July 4 holiday.

But, some packers may need hogs for the first full kill week after the holiday, which might underpin cash in the near term, traders said.

Retailers are buying pork sparingly until they evaluate how much cleared meat cases over the three-day holiday weekend, they said.

Cash hogs prices in the Midwest on Monday morning were generally inline with Friday’s sales, regional hog dealers said.

USDA data quoted Monday morning’s wholesale pork price at $82.21/cwt, up 48 cents from Friday.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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