Chicago Mercantile Exchange (CME) live cattle futures on Tuesday reclaimed some ground lost after equities and other commodities recovered from Monday’s selloff, traders and analysts said.
The lower dollar, stable gold prices and stock market recovery brought relief to the cattle market, said Dennis Smith, an analyst with Archer Financial Services.
CME live cattle’s discount to recent cash prices lured more buyers. And, the market’s slide to new contract lows on Monday attracted bargain hunters on Tuesday.
“Today we’re looking at the fundamentals a little closer… They suggest we’re probably at too much of a discount for the potential stabilization on the cash side,” said U.S. Commodities analyst Don Roose.
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On Monday, a light number of cash-basis cattle in Texas moved at $125 per hundredweight (cwt), down $2 from last week, said feedlot sources (all figures US$). No cash bids, asking prices or trades were reported by feedlot sources elsewhere in the U.S. Plains.
Bullish traders are expecting remaining cattle to trade steady with mostly $127 to $128 last week in the Plains. They cited warmer weather in the coming weeks to spark meat grilling demand and lift wholesale beef values.
The U.S. Department of Agriculture Tuesday morning quoted the average wholesale choice beef price at $190.18/cwt, up 29 cents from Monday; select cuts dipped 20 cents to $183.71.
Market bears see packers keeping a tight rein on cash spending as they grapple with poor margins. And more cattle are available for sale than a week ago.
U.S. beef packer margins on Tuesday were estimated at a negative $50.50 per head versus a negative $62.70 on Monday and a negative $51.55 a week ago, according to HedgersEdge.com.
CME live cattle and hog traders bought deferred-month contracts as Chicago Board of Trade corn shrugged off Monday’s losses. More-expensive corn could cause cattle and hog producers to feed fewer animals and to lower weights.
Spot April live cattle closed up 0.325 cent/lb., to 125.375 cents. Most-actively traded June ended 0.625 cent higher at 120.45 cents.
Short-covering and live cattle futures’ upswing helped reverse Monday’s CME feeder cattle losses.
Spot April feeder cattle settled up 0.35 cents/lb. at 136.95 cents. Most-actively traded May closed at 140.05 cents, gaining 0.25 cent.
Hogs turn up with cash
CME hogs turned higher on short-covering prompted by mostly firmer cash prices, a trader said.
Wholesale pork prices also improved on Tuesday and are expected to trend higher as grocers buy fresh meat for outdoor cookouts soon, he said.
The government on Tuesday reported the average hog price in the most-watched Iowa/Minnesota market jumped 86 cents/cwt from Monday to $79.83.
Tuesday afternoon’s USDA mandatory wholesale pork price, calculated on a plant-delivered basis, was at $82.89/cwt, up 31 cents from Monday.
On April 12 the government replaced its little-used voluntary pork price data with the new in-depth mandatory reports.
CME June hogs settled up 0.425 cent to 89.025 cents/lb. July finished at 89.3 cents, up 0.575 cents.
— Theopolis Waters writes for Reuters from Chicago.
