Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures rallied again on Tuesday, led by more short-covering and sentiments that last week’s selloff was overdone, traders said.
April live cattle closed 1.25 cents/lb. higher at 126.8 cents, and June ended 2.15 cents/lb. higher at 118.75 cents (all figures US$).
“We saw short-covering because there was really no reason for the market to be as low as it was,” said Oak Investment Group president Joe Ocrant.
The morning’s mixed rather than lower beef cutout values, and packer profit’s huge jump following last week’s cash price tumble, contributed to futures buying and stirred talk of at least steady cash prices by Friday.
Last week, market-ready, or cash, cattle in the U.S. Plains brought $125-$128/cwt, down from $133 to $136 the week before, said feedlot sources.
Tuesday’s average beef packer margin was estimated at positive $60.75 per head, up from a positive $6.45 on Monday and a positive $30.05 a week earlier, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price was down 24 cents/cwt from Monday to $219.97. Select cuts rose $1.22, to $211.45, the U.S. Department of Agriculture said.
Buy stops, short-covering and CME live cattle futures’ upswing boosted feeder cattle contracts.
April feeder cattle, which will expire on Thursday, closed up 0.55 cent/lb. to 146.575 cents. May ended 1.925 cents higher at 145.175 cents.
Lower hog market settlement
CME lean hogs finished lower, pressured by cash price uncertainty and futures’ premiums to the exchange’s hog index for April 22 at 68.06 cents, traders said.
Thinly traded May ended down 0.15 cent/lb. to 74.775 cents, and most-active June closed 0.625 cent lower at 77.825 cents.
Regional hog dealers quoted the morning’s cash hog prices in the Midwest steady with Monday’s sales. Prices on the government’s morning direct hog market report were unquoted.
Some packers may need a few hogs for the rest of this week’s production, said dealers.
They said at least one major packing plant scheduled to be closed on Thursday, and possibly Friday, for equipment upgrades will require fewer pigs.
Meanwhile, grocers stepped up pork purchases to accommodate grilling demand and in preparation for Mother’s Day advertisements in early May, a trader said.
Tuesday morning’s wholesale pork price at $81.59/cwt was up $1.01 from Monday, according to USDA data.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.