Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Tuesday, helped by rising wholesale beef values, traders said.
June ended 0.725 cent per pound higher at 151.45 cents, and August was up 0.775 cent at 149.9 cents (all figures US$).
Tuesday morning’s wholesale choice beef price climbed $1.33 per hundredweight (cwt) from Monday to $256.97. Select cuts were up 36 cents at $244.26, the U.S. Department of Agriculture (USDA) said.
CME live cattle appears to be driven by cash prices that reflect improved beef demand as retailers prepare for Memorial Day grilling specials, said Global Commodity Analytics president Mike Zuzolo.
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Packers last week paid mostly $160-$163/cwt for market-ready (cash) cattle, which was up as much as $4 from the week before, industry sources said.
This week’s cash price direction is clouded by fewer cattle for sale with some packers drawing from ample inventories stockpiled over the past few weeks.
CME feeder cattle finished higher on buy stops, live cattle futures advances and steady to $4 higher cash feeder cattle prices.
April closed up 0.225 cent/lb. at 215.375 cents, and August 0.925 cent higher at 218.25 cents.
Hogs end higher
CME lean hogs drew support from short-covering and fund buying after the May contract rolled through a key technical resistance barrier, traders said.
Thinly traded May closed 2.075 cents/lb. higher at 79 cents after breaking through the 100-day moving average of 77.34 cents. June finished 0.925 cent higher at 82.75 cents.
Tuesday’s gains were fund-related short-covering, partly stirred by the weaker dollar and improving export demand for pork in recent weeks, Zuzolo said.
In a trading strategy known as bull spreads, traders bought May and simultaneously sold deferred months.
May futures, which will expire on May 14, is closer in line with cash prices than June and July, which remain at sizable premiums to cash, traders said.
The morning’s average hog price in Iowa/Minnesota slipped 17 cents/cwt in light volume to $75.57 from Monday, the USDA said.
Investors are eyeing slaughters for clues that processors may be cutting production to shore up their sagging margins.
Packers on Tuesday processed 419,000 hogs, 10,000 fewer than last week, according to USDA estimates.
Tuesday’s pork packer margins were a negative $9 per head, compared with a negative $9.40 on Monday and a positive $4.20 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
