U.S. livestock: Beef price turnaround rallies CME live cattle futures

Feeder cattle futures close sharply higher, strong lean hog futures settlement

Chicago/Reuters – Chicago Mercantile Exchange live cattle contracts finished in positive territory on Tuesday for the first time in five sessions, fuelled by active short-covering following the recent wholesale beef price rise, traders and analysts said.

August closed 2.025 cents per lb higher at 145.050 cents, and October 2.825 cents at 146.800 cents.

The morning’s wholesale choice beef price, or cutout, was at $233.20 per cwt, 93 cents higher than on Monday. Select cuts were up 56 cents to $229.44, the U.S. Department of Agriculture said.

The cutout likely benefited from packers that cut slaughters to recoup lost margins and retailers possibly preparing to feature beef for Labor Day grilling demand, a trader said.

Packers may have to pay at least the same for market-ready, or cash, cattle as last week given Tuesday’s CME live cattle rally, traders and analysts said adding processors showed their hand by bidding for supply earlier in the week than normal, which sends a signal that they might need cattle.

“My opinion is that they (packers) are probably looking to the beef bottoming out and want to have enough cattle to kill,” said Oak Investment Group president Joe Ocrant.

Cash cattle bids in Kansas cropped up at $143 per cwt against $148 asking prices, feedlot sources said. In Nebraska, packers bid $144 to $145 with no response from sellers, they said.

A week ago, cash cattle in the U.S. Plains traded at $145 to $146 per cwt.

August closed 2.500 cents per lb higher at 211.250 cents, on short-covering and live cattle market gains.

Hog futures up with cash

CME lean hogs drew support from buy stops, fund buying and the morning’s unexpected cash price spike, traders said.

August ended 1.950 cents per lb higher at 79.475 cents, and above the 100-day moving average of 78.51 cents. October up 1.500 cents at 65.050 cents, and surpassed the 20-day moving average of 64.39 cents.

USDA reported Tuesday morning’s average cash hog price in Iowa/Minnesota had climbed $1.46 per cwt from Monday to $75.61.

Processors may need a few hogs despite word that at least three packing plants plan to be offline on Monday for an annual early August floater holiday, a trader said.

The August contract kept pace with CME’s hog index for July 24 at 78.53 cents, while October attracted buyers based on its sizable discount to that index, he said.

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