* Beef price surge helps CME live cattle
* Feeder futures climb as corn prices slide
* Speculative buying pull up CME hog futures
By Theopolis Waters
CHICAGO, Jan 8 (Reuters) - Chicago Mercantile Exchange live
cattle and hog futures on Wednesday gained as funds sold, or
rolled, the February contract and bought deferred months,
traders said.
CME livestock fund investors liquidated their February long
positions, and mainly bought April futures, in a procedure
known as the "roll" by followers of the Goldman Sachs Commodity
Index (S&PGSCI).
Wednesday was the first of five days for the S&PGSCI roll
Read Also
Manitoba cattle prices, Oct. 17
process.
Sharply higher wholesale beef prices kept February futures
from sliding into negative territory after the shift by funds.
The Wednesday morning wholesale price, or cutout, for choice
beef surged $2.49 per hundredweight (cwt) from Tuesday to
$209.80. Select climbed by $2.98 to an all-time high of $206.54,
according to the U.S. Department of Agriculture.
Analysts attributed wholesale beef price gains in part to
recent changes in the way USDA calculates specific beef cuts
within the cutout.
Back-to-back holiday plant shutdowns and recent weather
disruptions to livestock production put less fresh beef in the
hands of end users.
And processors raised the cost of beef at wholesale to
offset record-high prices for cattle.
Last Friday, the cattle in the U.S. Plains moved at mostly
$137 to $138 per cwt, eclipsing the prior week's $133 to $136
record, feedlot sources said.
"You have to have good wholesale prices to justify paying up
to $138 for cattle," said Dan Vaught, economist with Doane
Advisory Services.
This week, cash cattle bids of $135 per cwt surfaced in
Kansas against $140 asking prices from sellers, feedlot sources
said.
Wednesday's live cattle futures' upswing and strong beef
cutout performance could lend cash cattle price support this
week, traders and analysts said.
Packers may further curtail operations to limit cash
spending and shore up their sagging margins.
Beef packer margins were estimated at a negative $80.25 per
head, compared with a negative $76.45 per head on Tuesday, as
calculated by HedgersEdge.com.
February live cattle ended unchanged at 136.525
cents. April and June finished 0.625 cent higher
at 136.975 and 129.950 cents, respectively.
CME feeder cattle drew support from higher live cattle
futures and lower corn prices.
January feeder cattle closed at 168.475 cents per
lb, up 0.425 cent. March finished at 168.550 cents per
lb, 0.725 cent higher.
HOGS TURN UP AS SPECS BUY
CME hogs posted modest gains, helped by speculative buying
after Tuesday's losses in anticipation of lower cash prices,
traders and analysts said.
February hogs closed up 0.050 cent per lb to 85.575
cents, and April ended at 91.100 cents, 0.375 cent
higher.
"People were probably doing some bargain hunting after
factoring in Tuesday's market selloff," Vaught said.
USDA's morning direct hog market prices were not available.
Hogs in the Midwest traded steady to $1.00 per cwt lower,
according to hog dealers.
They said some packers in the Midwest are unable to coax
hogs from farms that remain isolated by dangerous county road
conditions caused by recent winter storms.
Other processors are buying hogs for the rest of the week to
make up for weather-related downtime, traders said.
(Editing by Marguerita Choy)
LIVESTOCK-CME live cattle, hog futures rise amid roll by funds
By
Related Coverage
explore
Stories from our other publications
