Chicago | Reuters — Chicago Mercantile Exchange live cattle finished up their three-cent-per-pound daily price limit on Tuesday, driven by short-covering and bargain hunting following the spike in wholesale beef prices, traders said.
Spot October and December finished at 125.125 and 133.225 cents, respectively (all figures US$). Live cattle’s trading limit will be expanded to 4.5 cents on Wednesday following Tuesday’s limit-up settlement.
Tuesday morning’s wholesale choice beef price, or cutout, jumped $1.39/cwt from Monday, to $205.36. Select cuts rose 77 cents, to $199.82, the U.S. Department of Agriculture said.
Some investors attributed the cutout’s upswing to beef prices possibly bottoming out seasonally. Others said the shutdown of at least one packing plant this week for maintenance sent grocers scrambling for product.
More than one day is needed to confirm a cutout uptrend, “but this is our best shot” at seeing some semblance of increased beef demand, said U.S. Commodities analyst Don Roose.
However, he said, October live cattle has reached a point to where they might prompt more deliveries against the contract.
Market participants look for packers to ease recent pressure on cash bids given their growing profit margins, the session’s futures rally and potential beef price recovery.
Last week, market-ready, or cash, cattle fetched mostly $118 to $124/cwt, down from $128 to $132 the week before.
Technical buying and sharply higher live cattle futures sent most CME feeder cattle up their 4.5 cents/lb. price limit, which will be widened to 6.75 cents on Wednesday.
October feeder cattle ended at 182.525 cents, up 4.4 cents/lb. November and January closed limit up at 178.025 and 172.8 cents.
Higher hog market settlement
CME lean hogs were supported by live cattle market gains and deferred-month discounts to the exchange’s hog index for Oct. 2 at 73.38 cents, traders said.
Spot October closed up 0.6 cent/lb. to 73.6 cents, and December two cents higher at 66.725.
Fund buying erupted after December and February plowed through their respective 200-day moving averages of 65.96 and 69.07 cents.
Fundamentally, packers have all they need for this week’s production, while supermarkets consider advertising beef after October National Pork Month, a trader said.
USDA reported Tuesday morning’s average cash hog price in the Iowa/Minnesota market at $71.72/cwt, $1.76 lower than on Monday.
The government quoted the morning’s wholesale pork price at $87.31/cwt, up 14 cents from Monday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged beef prices, cattle futures, closing markets, CME, cutout, feeder cattle, hog futures, USDA