Chicago | Reuters — Most Chicago Mercantile Exchange live cattle contracts gained modestly on Friday, supported by brisk wholesale beef demand and futures’ discounts to a small number of cash cattle that sold so far this week, traders said.
April live cattle ended down 0.275 cent/lb. to 131.475 cents (all figures US$). June closed up 0.425 cent to 122.175 cents, and August finished 0.625 cent higher at 118.025 cents.
The morning’s wholesale choice beef price was at $225.03/cwt, up 60 cents from Thursday and almost $10 higher than last week, according to the U.S. Department of Agriculture.
USDA’s data also showed select cuts at $216.30/cwt, which climbed $1.47 from Thursday and up more than $10 from a week ago.
This week, market-ready, or cash cattle, in the U.S. Plains traded at $133 to $136/cwt, nearly par with last week’s $132 to $136 sales, said feedot sources.
They said, the remaining cash cattle were bid at $134/cwt against sellers that priced them up to $138, given now-positive packer margins and solid beef cutout values.
The average beef packer margin on Friday was estimated at positive $21.35 per head, up from a negative $2.15 on Thursday and a negative $54.50 a week earlier, as calculated by HedgersEdge.com.
April lagged after investors sold that contract and simultaneously bought deferred months in a trading strategy known as bear spreading.
“It is really fascinating to see April cattle ignoring that cash trade. I guess the board does not expect the cash to hold next week,” said independent livestock futures trader Dan Norcini.
Technical buying and back-month live cattle futures gains supported CME feeder cattle contracts. April closed up 0.15 cent/lb. to 155.075 cents.
Hog market closes higher
Short-covering and speculative buying drove CME lean hog futures higher, offsetting the morning’s cash price tumble, a trader said.
Thinly-traded May ended 0.975 cent/lb. higher at 74.4 cents, and most active June finished up 0.5 cent, to 77.625.
Government data on Friday showed the morning average cash hog price in Iowa/Minnesota had fallen $3.14/cwt from Thursday, in light volume, to $63.29.
Most packers bought enough hogs for early next week, an analyst said. But others are short on inventory due to seasonally tight supplies and many farmers are actively working their fields, which slows delivery of hogs to packers, he added.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged closing markets, CME, feeder cattle, lean hogs, live cattle