Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished moderately higher on Tuesday, after uneasiness about cash prices later this week pulled contracts from initial short-covering highs, traders said.
Spot December ended up 0.775 cent/lb. to 120.3 cents, and February 1.125 cents higher at 125.525.
Those who had been short futures covered those positions after packers in the U.S. southern Plains bid $117 to $118/cwt for market-ready, or live cattle. Last week, cash cattle moved at mostly $118 to $121/cwt.
Market bulls said early-week cash bids suggest packers need to build inventory despite more animals for sale this week and plants operating fewer days over the Christmas and New Year’s holidays.
Contrarians cited anemic wholesale beef demand, record pork supplies and sufficient numbers of heavyweight cattle as obstacles for improved cash cattle values.
Tuesday morning’s wholesale choice beef price fell $1.14/cwt from Monday, to $197.64. Select cuts jumped $2.42, to $189.15, according to U.S. Department of Agriculture data.
Soft corn futures and firm live cattle futures lifted CME feeder cattle contracts. January finished up 0.375 cent/lb. to 148.525.
Weak fundamentals drop hog futures
The morning’s dip in cash and wholesale pork values weakened CME lean hogs, traders said.
Spot February closed 1.2 cents/lb. lower at 58.925 cents, and April ended down 0.25 cent to 64.175 cents.
USDA data showed Tuesday morning’s average cash hog price in Iowa/Minnesota at $51.94/cwt, down 12 cents from Monday.
The wholesale pork price early on Tuesday was 45 cents/cwt lower than on Monday at $74.16, the USDA said.
Packers are coping with larger-than-expected hog supplies for this time of year based on government forecasts in the September quarterly hog survey.
“There are simply too many hogs, and the number is not coming down as it should if that September report were accurate,” said independent livestock futures trader Dan Norcini.
Some have attributed the current supply surplus to farmers sending hogs to market ahead of time to avoid lower prices as plants prepare to close during the year-end holidays.
Hogs have become more readily available as warmer-than-usual temperatures in the Midwest cause them to gain weight faster.
Monday and Tuesday’s combined hog slaughter at 879,000 head is 3,000 more than the same period last week, based on USDA estimates.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.