Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher for a second day in a row Wednesday, helped by more short-covering as expectations improved regarding cash prices later this week, traders said.
Spot December finished at 130.975 cents/lb., up 2.95 cents, and February 2.55 cents higher at 133.125 cents (all figures US$).
Wednesday’s futures advances may have been driven by talk of better-than-anticipated prices for market-ready (cash) cattle at smaller cattle auctions, said Vetterkind Cattle Brokerage president Troy Vetterkind.
Cash cattle sellers elsewhere in the U.S. Plains have not received bids from packers after pricing their animals up to $130/cwt, said feedlot sources. Last week, cash cattle sold at $126-$129.
Negative packer margins and tepid wholesale beef demand work against cash prices. But wintry weather and fewer animals for sale, despite the Thanksgiving holiday-shortened workweek, might underpin cash values in some areas.
Wednesday morning’s wholesale choice beef price slipped 36 cents/cwt from Tuesday, to $208.01. Select cuts rose 64 cents to $198.57, based on U.S. Department of Agriculture data.
The average beef packer margin for Wednesday was a negative $6.30 per head, compared with a negative $10.45 on Tuesday, as calculated by HedgersEdge.com.
Bullish investors cited winter-like weather in parts of the Plains that could disrupt cattle production while supporting cash and wholesale beef prices in the near term.
Buy stops and more live cattle futures buying lifted CME feeder for a second straight day. Spot November closed at 174.875 cents, up 1.4 cents.
Uneven hog market settlement
CME lean hogs were strengthened by the morning’s bump in wholesale pork values, but pressured by weaker cash price expectations, traders said.
Spot December finished up 0.2 cent/lb. to 54.375 cents, and February ended down 0.1 cent, to 56.275 cents.
Wednesday morning’s wholesale pork price rose $1.24/cwt from Tuesday to $73.27, following $5.38 higher pork belly costs, USDA said.
Cash hog prices in the Midwest on Wednesday morning were generally steady, according to regional hog dealers.
Some processors have inventories full heading into the holiday, but others still need hogs for Saturday’s 190,000-plus projected kill, a trader said.
Meanwhile, retailers are periodically buying pork at lower prices to advertise after the U.S. Thanksgiving holiday, he said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle