Glacier FarmMedia COVID-19 & the Farm

U.S. livestock: Beef price bounce extends CME live cattle futures gains

feedlot
(Photo courtesy Canada Beef Inc.)

Chicago / Reuters – Chicago Mercantile Exchange live cattle futures gained for a third straight session on Tuesday, fueled by technical buying and the day’s wholesale beef price turnaround, said traders.

August live cattle closed 0.925 cents per lb higher at 113.875 cents, and above the 40-day moving average of 113.30 cents. October settled 1.500 cents higher at 112.575 cents and over the 20-day moving average of 111.13 cents.

CME live cattle will resume their normal 3-cent daily price limit on Wednesday after failing to settle at the newly expanded trading limit of 4.5-cent on Tuesday.

The morning’s choice beef price, our cutout, jumped $1.44 per cwt from Monday to $200.03. Select cuts climbed $1.87 to $191.31, the U.S. Department of Agriculture said.

Tuesday’s beef cutout price upswing, futures’ recent rally and roughly 5,000 fewer cattle for sale this week points to steady to higher cash prices by Friday, said traders.

Last week, market-ready, or cash, cattle in the southern U.S. Plains fetched $115 per cwt.

Average beef packer margins for Tuesday were a positive $29.25 per head, up from a positive $28.65 on Monday, as calculated by HedgersEdge.com.

In a trading strategy known as bear spreading, investors sold August futures and simultaneously bought the October contract.

Technical buying, higher cash feeder cattle prices and live cattle futures advances lifted CME feeder cattle contracts for third consecutive session.

August feeders closed at 142.450 cents, up 0.75 cents per lb. An expanded limit of 6.75 cents will return to 4.5 cents on Wednesday.

Lower hog futures close

Profit-taking, Tuesday’s soft wholesale pork values and the almost two-week cash price slump undercut CME lean hogs, said traders.

August hogs finished 1.075 cent per lb lower at 74.600 cents, and October ended 0.725 cent per lb lower at 63.625 cents.

The government reported Tuesday morning’s average cash hog price in Iowa/Minnesota dropped 82 cents per cwt from Monday to $70.60 in light sales volume.

Tuesday morning’s wholesale pork price, or cutout, slipped 23 cents per cwt from Monday to $88.66, the USDA said.

“I think the market, cash and futures, are kind of carving out a short-term bottom,” said AgFutures Managed Investments hog futures trader Tom Cawthorne.

He and others cited the seasonal increase in meat demand in late July. They also said supermarkets may buy pork ahead of potential shortages after at least three packing plants close on Monday for a summer floater holiday.

Editing by Alan Crosby

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