Chicago Mercantile Exchange (CME) live cattle futures closed moderately higher on Monday, drawing support from short-covering after three straight losing sessions, analysts and traders said.
They said firmer wholesale beef prices encouraged buyers.
U.S. Department of Agriculture data Monday morning quoted wholesale choice beef at $196.22 per hundredweight (cwt), up 46 cents from Friday; select cuts gained 28 cents to $194.21 (all figures US$).
And futures recovered from early-session lows after the U.S. stock market erased triple-digit losses as investors sorted through details of a controversial euro zone bailout package for Cyprus.
The radical plan to bail out troubled Cypriot banks rattled global financial markets and gave Wall Street investors a chance to take profits following a recent string of advances.
Live cattle market traders at first worried that the stock market’s initial selloff would trigger fund liquidation in commodities, including CME’s live cattle market.
"It was a quiet day. Anything that got these guys to buy or sell, whether it was beef quotes or the volatile stock market, was fair game," a CME live cattle trader said.
Cattle futures investors waited for feedlots to count the number of animals for sale this week. Cash-basis cattle last week fetched $126 to $127/cwt, $1 to $2 lower than the week before.
Processors spent less for supplies given futures’ setback on Friday. The slowdown in wholesale beef demand late last week pressured cash values and significantly cut packer margins.
HedgersEdge.com calculated U.S. beef packer margins on Monday at a positive 55 cents per head versus a positive $10.50 on Friday and a positive $3.10 a week ago.
"I would tend to think that some of the downward (futures) bias is not over with and that’s why you have people willing to sell rallies," said R.J. O’Brien floor manager James Brooks.
April live cattle closed at 126.05 cents/lb., 0.275 cent higher.
June was up 0.075 cent at 121.375 cents. It recovered from an early-session drop to a new contract low of 121.025 cents in after-hours trading.
CME feeder cattle mimicked the firm live cattle market that lifted feeder cattle futures from fresh contract lows.
Spot March feeders settled up 0.025 cents/lb. at 136.7 cents. It made a new contract low of 136.225 in after-hours trading.
Most-actively traded April ended at 139.4 cents, 0.3 cents higher, posting a fresh contract low of 138.65.
Hogs wilt amid uncertainty
The lack of clear cash hog and wholesale pork price direction kept CME hog futures buyers at bay, traders and analysts said.
And bullish traders were leery of futures’ premium to CME’s lean hog index at 77.08 cents.
April hogs closed at 79.4 cents/lb., down 0.275 cents. June was 0.375 cents lower at 88.95 cents.
"I don’t see any reason to own April hogs right now. I’m not hearing any good news on the horizon anytime soon," said independent hog futures trader Jim Burns.
Some packers may pressure cash hog bids given ample supplies. But, other processors may need hogs soon to accommodate this week’s slaughter schedule.
USDA data Monday morning showed the average hog price in the eastern Midwest market at $71.96/cwt, 89 cents lower than Friday. Prices elsewhere in the Midwest region were unavailable.
Packers on Monday slaughtered an estimated 426,000 hogs, 14,000 more than a week ago and up 13,000 from a year earlier.
– Theopolis Waters writes for Reuters from Chicago.