Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts on Tuesday closed in positive territory for the first time in 12 sessions, helped by short-covering and futures’ discounts to early-week cash prices, traders said.
August live cattle, which will expire on Wednesday, closed up 0.75 cent/lb. to 111.5 cents (all figures US$). Most actively traded October ended 2.4 cents higher at 107.475 cents.
So far, market-ready, or cash, cattle in the U.S. Plains moved at $110-$111/cwt, said feedlot sources. That was down from mostly $115 last week with other sellers pricing cattle at $115-$117.
Some investors may have come to the realization that fourth-quarter cattle supplies may not grow as much as last Friday’s government monthly cattle report had suggested, said Doane Advisory Services economist Dan Vaught.
Recent futures declines encouraged producers to send cattle to market earlier than they had anticipated, which could result in reduced slaughter numbers after the Labour Day holiday, he said.
However, some traders remain skeptical given still-plentiful current cattle numbers that continue to weigh on wholesale beef prices ahead of upcoming holiday cookouts.
The afternoon’s choice beef price sank $1.80/cwt from Monday to $196.62. Select cuts fell $1.17, to $191.17, according to the U.S. Department of Agriculture.
Short-covering, lower corn prices and late-day CME live cattle strength boosted the exchange’s feeder cattle contracts. September ended 3.375 cents/lb. higher at 142.525 cents.
Higher hog futures close
CME lean hogs drew strength from short-covering before the final trading day for the month on Wednesday and futures’ discounts to the exchange’s hog index for Aug. 26 at 66.61 cents, traders said.
They added that hog contracts were further supported by technical buying in the rally in neighbouring cattle markets.
October ended up 0.675 cent/lb., to 62.05 cents. December finished 0.775 cent higher at 57.1 cents, and above the 10-day moving average of 56.48 cents.
Investors keep close watch as cash prices continued their downward spiral due to abundant supplies that are expected to increase even more this fall as temperatures moderate, creating ideal conditions for raising hogs.
The government reported Tuesday morning’s average cash hog price in Iowa/Minnesota dropped 62 cents/cwt from Monday, to $61.65.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle