U.S. livestock: CME live cattle snap back on bargain hunting

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle closed higher on Friday, after short-covering and bargain buying pulled contracts up from Thursday’s seven-week low, said traders.

Bullish investors were further drawn to futures’ price value compared to this week’s prices for slaughter-ready, or cash, cattle.

April live cattle closed 1.35 cents/lb. higher at 123.125 cents, and above the 10-day moving average of 123.108 cents (all figures US$). June finished 1.025 cents higher at 114.3 cents.

This week the bulk of cash cattle in the U.S. Plains traded from $126-$127/cwt versus last week’s mostly $126 sales, said feedlot sources.

Rising packer profits and robust beef demand encouraged packers to pay more for supplies, said analysts and traders.

However, they added that expectations of increased supplies limited CME live cattle market advances.

“Futures were discounted to the cash market. But the packer popped his head up, bought what he needed and stepped away,” said CHS Hedging analyst Steve Wagner.

The bright spot for the cattle sector is how well wholesale beef demand has held up in the midst of the Lenten season — largely due to solid U.S. beef exports, said Wagner.

April live cattle led gainers stirred by bull spreads which consisted of some traders who bought April and simultaneously sold deferred months.

However, bull spreads offset funds in CME’s livestock markets that at times sold, or “rolled,” April long positions into the June contract in accordance with the Standard + Poor’s Goldman Sachs Commodity Index.

Friday was the third of five sessions for the roll process.

Short-covering and live cattle futures’ rebound lifted CME feeder cattle contracts.

March feeders ended 0.775 cent/lb. higher at 142.525 cents.

Hogs post modest losses

Hog futures at the CME were weakened by packers paying less for hogs following the recent slump in wholesale pork prices, said traders.

Wholesale pork values will likely recover when retailers purchase more hams for Easter and as the spring grilling season approaches, said Wagner.

Market participants said trade war fears, and how that might impact U.S. pork exports, kept a lid on deferred CME hog contracts.

The U.S. exports roughly a quarter of the pork it produces, said industry experts.

April hogs closed down 0.225 cent/lb. at 67.85 cents, and May finished 0.35 cent lower at 72 cents.

Reporting for Reuters by Theopolis Waters in Chicago.

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