U.S. livestock: Short-covering pulls up CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday reversed some of their recent losses, with strength from technical buying and investors who covered previously held short positions, said traders.

“Anyone who was short the market took a little money in profits,” said Oak Investment Group president Joe Ocrant.

Wednesday morning’s wholesale beef price setback, and uncertainty regarding what packers will pay for slaughter-ready or cash cattle this week, capped October future’s advances.

October live cattle finished up 0.3 cent/lb. to 108.575 cents (all figures US$). December closed 1.425 cents higher at 114.9 cents, and above the 100-day moving average of 114.636 cents.

Market participants were left without cash price direction following the lack of animal sales at Wednesday morning’s Fed Cattle Exchange.

Packers in Texas and Kansas tabled bids of $104/cwt against sellers who are asking as much as $111 for their cattle. Cash cattle last week in the U.S. Plains brought $108 to $109.

Profits for packers remain extremely high, which is supportive for cash prices, said traders.

But, they said, increased supplies in the coming months and potentially lackluster beef demand are bearish cash price factors.

Higher cash feeder steer prices, live cattle futures turnaround and technical buying rallied CME feeder cattle contracts.

September, which will expire on Thursday, closed 1.825 cents/lb. higher at 152.4 cents. Most actively traded October ended 2.05 cents higher at 152.7 cents.

Hog futures rebound

Investors bought deferred contracts and simultaneously sold October futures on position squaring in advance of the U.S. Department of Agriculture’s quarterly hog report on Thursday at 2 p.m. CT.

Uneasiness about cash prices, due to ample supplies, limited October futures buying interest that earlier dropped the contract to a new low of 54.925 cents.

Fund buying surfaced after deferred months punched through key technical resistance levels.

October ended up 0.15 cent/lb. to 55.4 cents. December finished 1.55 cents higher at 59.65 cents and surpassed the 20-day moving average of 58.285 cents.

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

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