Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts finished moderately higher on Wednesday, helped by short-covering following the day’s turnaround in wholesale beef values, traders said.
February live cattle closed 0.5 cent/lb. higher at 132.1 cents, and April ended up 0.325 cent, to 133.025 cents (all figures US$).
Wednesday’s afternoon’s wholesale beef price, or cutout, was up three cents/cwt from Tuesday, to $235.21. Select cuts jumped $1.47, to $229.08, according to U.S. Department of Agriculture data.
The cutout stabilized on Wednesday after Tuesday’s decline, but feedback from end users suggests they will push back against overall higher beef prices, said Allendale Inc. chief strategist Rich Nelson.
Investors waited for the bulk of unsold market-ready (cash) cattle to change hands.
On Tuesday, a small number of cash cattle in Kansas and Nebraska sold at $133-$134/cwt, steady to up $2 from last week.
The plunge in U.S. stock markets, as well as slumping oil prices, limited CME livestock futures gains, traders and analysts said.
Funds sold the February live cattle and lean hog contracts, and at the same time bought deferred months, in association with the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Wednesday was the fourth of five days of the process known as the S+PGSCI “roll.”
Simultaneously, some index funds bought CME livestock futures as part of their annual rebalancing of commodity holdings.
Modest live cattle market advances underpinned CME feeder cattle futures. January closed up 0.55 cent/lb., to 160.775 cents.
Hog futures slip
CME lean hogs were pressured by profit-taking and futures’ premiums to the exchange’s hog index for Monday at 54.21 cents, traders said.
Spot February finished 0.275 cent/lb. lower at 61.625 cents, and April ended down 0.15 cent, to 67.15.
Futures sagged in spite of supportive cash and wholesale pork prices.
Packers in Iowa/Minnesota on Wednesday afternoon paid $52.39 for hogs, up 69 cents from Tuesday.
The government reported the afternoon’s wholesale pork price at $70.65/cwt, up 17 cents from Tuesday.
Hog supplies are beginning to tighten seasonally as colder temperatures slow down animal weight gains, analysts and U.S. Midwest hog dealers said.
They said processors are filling inventories for a projected 235,000-head Saturday slaughter.
Smithfield Foods has added hogs to Saturday’s kill to make up for Monday’s downtime after technical problems halted hog processing at several of its plants.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.