U.S. livestock: Strong cash prices drive CME live cattle limit-up

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed up their three cent/lb. maximum daily price limit on Wednesday, ignited by short-covering in response to better-than-expected cash prices, traders said.

August and October finished at 151.075 and 153.7 cents, respectively (all figures US$). The CME live cattle trading limit will be expanded to 4.5 cents on Thursday following Wednesday’s limit-up settlement.

On Wednesday, slaughter-ready (cash) cattle in the U.S. Plains fetched $148 to $152/cwt, as much as $4 higher than last week, feedlot sources said.

“It was surprising to see cash way up on Wednesday, after even I got weak in the knees after futures big losses yesterday,” a Midwest feedlot manager said.

Armed with extremely profitable margins and faced with less cattle for sale, packers hiked bids for supplies needed for the first full workweek after the U.S. July 4 holiday.

Beef packer margins for Wednesday were at a positive $112.90 per head, their highest so far this year topping a positive $111 on Tuesday, as calculated by HedgersEdge.com.

Modest beef cutout price gains further encouraged futures buying, although investors were mindful that summer’s heat tends to temper grilling demand.

Wednesday morning’s wholesale choice beef price was up five cents/cwt from Tuesday to $252.78. Select cuts rose 17 cents, to $249.52, the U.S. Department of Agriculture said.

Fund buying and buy stops enhanced live cattle futures advances.

Short-covering and live cattle futures buying rallied feeder cattle contracts.

August closed 3.775 cents/lb. higher at 218.5 cents.

Front-month hogs up, others down

CME July hog futures were guided by the exchange’s hog index for June 29 at 77.32 cents, while August was supported by its discount to the index, traders said.

Profit-taking after recent market gains pulled down deferred hog months, they said.

July closed 0.9 cent/lb. higher at 77.1 cents, and August up 0.475 cent, to 74.85 cents. October ended 0.675 cent lower at 65.325 cents, and December down 0.725 cents to 63.5 cents.

Investors will monitor fundamentals as packers prepare to close plants at least one day for July 4 while booking hogs for early next week.

Retailers are buying less pork until they determine product sales over three-day holiday weekend.

Wednesday morning’s cash hog prices in the Midwest held steady with Tuesday’s prices, regional hog dealers said.

USDA quoted the morning’s wholesale pork price at $81.53/cwt, up nine cents from Tuesday.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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