U.S. livestock: CME live cattle rise on cash price outlook

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures finished firm on Friday in anticipation of better cash prices than last week, traders said.

June live cattle closed 0.275 cent/lb. higher at 122 cents, and August ended up 0.15 cent to 117.8 cents (all figures US$).

After futures closed, a small volume of market-ready, or cash, cattle moved in Kansas at $128/cwt, up $3 from a week ago there, said feedlot sources. They said other sellers in the U.S. Plains are holding up for at least $130.

Futures are significantly undervalued relative to cash prices, packers are making money and they need cattle for the first week of slaughters after the Memorial Day holiday, said Oak Investment Group president Joe Ocrant.

He foresees further cash advances next week as cattle weights decline and weather becomes more favourable for grilling, which could lift wholesale beef values.

The morning’s choice beef price, or cutout, at $222.73/cwt was down 55 cents from Thursday. Select cuts dropped 64 cents to $200.77, the U.S. Department of Agriculture said.

Beef packer margins for Friday, on average, were a positive $74.10 per head, up from a positive $58.45 on Thursday and a positive $55.39 a week ago, as calculated by HedgersEdge.com.

CME feeder cattle futures drew support from live cattle market buying and the increase in the exchange’s feeder cattle index for June 2 to 147.21 cents from 145.27 cents for June 1.

August finished 0.275 cent/lb. higher at 146.675 cents.

Hog futures up again

CME lean hogs climbed for a fourth straight session, with some contracts posting new highs, led by speculative buying and strong export business, traders said.

Spot June closed up 0.275 cent/lb. higher at 82.3 cents. July ended up 1.525 cents, to 85.975 cents, and earlier peaked at a fresh contract high of 86.275 cents.

July and August futures led advances with the view that hot summer weather and higher grain prices might reduce hog production at that time, a trader said.

Record-high pork prices in China could attract more affordable U.S. pork to that country, he said.

The morning’s lower wholesale pork value after packers returned to normal operations following Monday’s holiday disruption minimized June futures’ advances.

Friday morning’s wholesale pork price fell 77 cents/cwt from Thursday to $85.60/cwt, according to USDA.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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