Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts rose for a third day in a row on Friday, fuelled by short-covering and fund buying after contracts broke through technical resistance, traders said.
April live cattle ended up 1.95 cent/lb. at 134.375 cents, and June closed 1.8 cent higher at 124.025 cents (all figures US$).
Both contracts settled above their respective 100-day moving average of 133.63 and 123.43 cents.
Futures’ discounts to this week’s $132 to $136/cwt market-ready, or cash, cattle prices in the U.S. Plains attracted more buyers, traders and analysts said.
Last week, cash cattle moved at $133 to $136/cwt.
Cash price gains as the week progressed signaled that the market was recovering from what might have been a short-term low, said Doane Advisory Services economist Dan Vaught.
Some packers scaled back production to recover lost profits and lift the wholesale price of beef. At the same time, supermarkets are buying product to meet increased demand for spring grilling in parts of the country.
The average beef packer margin on Friday was estimated at a negative $54.50 per head, down from a negative $45 on Thursday and a negative $44.65 a week ago, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price was up 56 cents/cwt from Thursday, at $215.18. Select cuts slipped 17 cents, to 205.62, the U.S. Department of Agriculture said.
Fund buying and CME live cattle futures advances sent the exchange’s feeder cattle contracts sharply higher. April closed 1.75 cent/lb. higher at 155.9 cents.
Mostly higher hog futures
Near-term cash price uncertainty and the morning’s soft wholesale pork values undercut CME April lean hogs, traders said.
April futures, which will expire on April 14, came under more pressure after investors sold the contract and simultaneously bought deferred months as the live cattle market rallied.
“I think you’re certainly seeing some spillover strength from the cattle market. And the other thing is simply that it does look like the CME index has posted a bottom,” said Vaught.
The exchange’s hog index has increased seven days in a row, reaching 66.56 cents for April 6, reflecting generally higher cash prices over that period.
April closed down 0.3 cent/lb. at 66.825 cents. May and June ended 0.8 cent higher at 76.725 and 80.875 cents, respectively.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle