Short-covering rally lifts U.S. live cattle futures

Chicago Mercantile Exchange (CME) live cattle futures rallied Wednesday on short-covering before the extended Easter holiday weekend, analysts and traders said.

CME livestock pit trading will close at the normal 1 p.m. CT time on Thursday. The exchange will be closed on Friday for the Good Friday holiday.

April and June live cattle futures broke through their respective 10-day moving average resistance levels of 126.36 cents and 121.75 (all figures US$). The move triggered fund buying and buy stops.

Futures’ advances reinforced beliefs that unsold cash cattle would trade fully steady with last week’s $124 to $125 per hundredweight (cwt).

On Tuesday, cash cattle in Texas sold for $125/cwt, feedlot sources said. There were no cash bids or asking prices elsewhere in the U.S. Plains, they said.

Fewer cattle for sale versus last week was supporting cash prices. But unprofitable margins and fallen wholesale beef values could weigh on cash.

HedgersEdge.com calculated U.S. beef packer margins on Wednesday at a negative $15.40 per head versus a negative $14.50 on Tuesday and a negative $6.30 a week ago.

U.S. Department of Agriculture data Wednesday morning showed the average price for wholesale choice beef, or the cutout, down 36 cents/cwt at $190.07; select cuts slipped 18 cents to $188.99.

Wednesday morning’s beef sales volume totaled 150 loads, the most for a morning since 276 loads on Feb 19.

“We’re moving a lot of beef at cheaper prices. But we’d like to see the cutout price come up, which should help cash prices,” said Oak Investment Group president Joe Ocrant.

Cattle and hog packing plants will be closed for the Good Friday holiday. Most facilities are expected to resume operations on Monday.

April live cattle closed 1.4 cents/lb. higher at 127.35 cents. June was up 1.825 cents, to 122.975.

CME feeder cattle rose with the higher live cattle market and fund buying.

Spot March feeder cattle, which will expire on Thursday, settled up 0.425 cent/lb. to 135.275 cents. Most-actively traded April ended at 140.4 cents, 1.8 cents higher.

Most hogs drop before report

Hog futures settled mostly lower, weakened by profit-taking and positioning before the government’s quarterly hog report on Thursday, traders and analysts said.

Analysts expect the data to show modest hog herd expansion during the December-to-February quarter.

The recent cash hog price rebound and bullish spreads propped up the spot April contract.

“Packers gearing up for a big Saturday kill tells me that they are making money,” said independent livestock futures trader Dan Norcini. Industry sources estimated this weekend’s slaughter at roughly 82,000 head.

U.S. pork packer margins on Wednesday were at a positive $2.05 per head versus a positive $7.35 on Tuesday and a positive $5.30 a week ago, according to HedgersEdge.com

Norcini is anticipating a sharp increase in pork demand for grilling with the onset of warmer spring weather.

Spot April hogs closed at 80.075 cents, up 0.575 cents.

Most actively traded June was 0.4 cent lower, at 90.675 cents. It fluctuated on either side of its 20-day moving average of 90.28 cents. July closed down 0.25 cent, to 90.85.

— Theopolis Waters writes for Reuters from Chicago.

About the author

explore

Stories from our other publications