Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed mostly higher on Tuesday, driven by short-covering after contracts settled down their three cents/lb. daily price limit on Monday, traders said.
CME’s live cattle futures will return to the normal three-cent limit on Wednesday after failing to settle at the expanded limit of 4.5 cents on Tuesday (all figures US$).
June live cattle closed down 0.4 cent/lb. to 119.05 cents. August ended up 0.65 cents to 115 cents, and October 1.05 cents higher at 114.85 cents.
Some investors also bought deferred contracts and simultaneously sold June futures in anticipation of possible weak cash prices by Friday.
Last week, packers in the U.S. Plains paid $128-$129.50/cwt for market-ready, or cash, cattle that the week before brought $128-$132.50.
There are 49,000 more cattle for sale than last week and the market appears to be factoring in bigger cattle numbers ahead, a trader said.
June futures lagged despite profitable packer margins and firm wholesale beef values.
Beef packer margins for Tuesday, on average, were a positive $63.20 per head, down from a positive $67.80 on Monday and up from a positive $51.90 a week ago, as calculated by HedgersEdge.com.
The morning’s choice beef price was at $227.95/cwt, up 39 cents from Monday. Select cuts rose 64 cents, to $202.63, the U.S. Department of Agriculture said.
“With beef where it is I think there’s a chance we see retailers in the next few days start to look ahead for the Fourth of July holiday,” said Agrivisor Services analyst Dale Durchholz.
Short-covering and back-month live cattle buying boosted CME feeder cattle. Feeder cattle’s expanded 6.75-cent limit will return to the normal 4.5-cent limit on Wednesday.
August feeders closed 1.1 cents/lb. higher at 142.15 cents.
Sharply higher hog futures
CME lean hogs settled sharply higher fueled by weather concerns and escalating corn prices, traders said.
Summer hog contracts hit new highs stirred by worries that hot weather during that period might hurt production by slowing down animal weight gains, a trader said.
He said rising corn prices may also prompt farmers to feed animals to lighter weight and limit herd expansion.
Thinly-traded June, which expired at noon CT, closed down 0.15 cent/lb. to 81.675 cents.
Most-active July ended 1.975 cents higher at 88.075 cents, and August closed 1.5 cents higher at 89.325 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle