Chicago | Reuters –– Chicago Mercantile Exchange live cattle contracts advanced modestly on Monday, helped by short-covering and futures’ discounts to last week’s cash prices, traders said.
April ended up 0.025 cent per pound to 158.825 cents, and June up 0.15 cent, to 148.95 cents (all figures US$).
Last week, market-ready (cash) cattle in Kansas and Nebraska sold at $163 to $165.50 per hundredweight (cwt), compared to $167 to $169 the week before, feedlot sources said.
Poor margins and tepid wholesale beef values prompted packers to slash production while waiting for a seasonal bump in supplies.
“They (packers) are going to get by until the industry starts getting more cattle in May,” said Vetterkind Cattle Brokerage president Troy Vetterkind.
Monday morning’s choice wholesale beef price rose 89 cents/cwt from Friday to $257.40. Select cuts were up four cents/cwt, to $249.95, the U.S. Department of Agriculture (USDA) said.
The day’s beef packer margins were a negative $55.10 per head, compared with a negative $35.70 on Friday, according to HedgersEdge.com.
In a trading strategy known as bear spreading, investors periodically bought June and sold April futures before it expires on April 30.
CME April feeder cattle was pressured by as much as $4 per cwt lower cash feeder cattle prices, but remaining months drew support from softer corn futures and firmer live cattle contracts.
April closed down 0.2 cent/lb., to 212.25 cents, May up 0.325 cent to 210.05 cents and August ended 0.35 cent higher at 211.8 cents.
Hogs rise again
CME lean hogs settled higher for a second straight day as overall tight supplies boosted cash prices, despite Monday’s record slaughter, traders said.
April closed up 0.55 cent/lb. to 63.1 cents, and May ended 0.65 cents higher at 72.425 cents.
Cash hogs in the Midwest on Monday sold for as much as $2/cwt higher than on Friday, according to regional hog dealers.
On Monday, packers processed an estimated 452,000 hogs, which topped the previous actual kill record of 450,611 head on January 12, based on USDA data.
The “sole reason” for Monday’s huge kill was it included hogs that were processed on Sunday due to maintenance at a packing plant on Thursday and Friday, an industry source said.
Traders at times bought deferred contracts and simultaneously sold April futures that will expire on Wednesday.
–– Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, CME, hog futures