Chicago | Reuters — Back-month Chicago Mercantile Exchange feeder cattle futures on Thursday set new contract highs, sparked by weak corn prices that could help ease input costs for feedlots, traders said.
Feeder cattle futures drew more support from buying in the neighbouring CME live cattle pit.
May feeders gained more ground after breaking through the 20-day and 10-day moving averages of 179.058 cents and 179.255 (all figures US$).
August led advances after investors bought that contract and simultaneously sold May futures in a trading strategy known as bear spreading.
May closed 0.975 cent per pound higher at 179.6 cents. August ended up 1.6 cents to 184.05 cents, and hit a new contract high of 184.075 cents in after-hours electronic trading.
Live cattle extend gains
CME live cattle gained for a third straight session, supported by stout wholesale beef demand, traders said.
April live cattle closed up 0.325 cent/lb. to 144.25 cents, and June ended at 135.85 cents, up 0.75 cent.
Thursday morning’s wholesale choice beef price was up $1.42 per hundredweight (cwt) from Wednesday to $234.06. Select cuts rose $1.57 to $222.24, according to the U.S. Department of Agriculture.
Beef end users are stocking up to feature product during the spring grilling period, traders said.
Grocers competed for beef that was in short supply after some packing plants closed during the Easter holiday while others cut production to realign their margins, they said.
Futures’ discount to last week’s cash cattle prices attracted buyers. And traders bought June futures and at the same time sold April ahead of its April 30 expiration date.
Investors await this week’s cash cattle prices and Friday’s USDA monthly cattle-on-feed report.
Analysts expect Friday’s report to show the number of cattle placed in feedyards in March increased 0.8 per cent from a year ago led by record-high prices for market-ready cattle.
Spotty cash cattle bids of $142/cwt surfaced in Texas and Kansas with no response from sellers, feedlot sources said.
Last week, cash cattle in Texas and Kansas moved at $147/cwt, and at $148 in Nebraska, they said.
Despite solid beef demand and their improving margins, packers appear unwilling to spend more for cattle whose numbers have undergone a seasonal increase, a trader said.
Hogs retreat after early advances
CME hogs closed lower, pressured by profit-taking and futures’ premium to the exchange’s index at 117.69 cents, traders said.
Thursday morning’s 88 cent/cwt wholesale pork price drop from Wednesday to 116.53, and near-term cash price uncertainty given fading packer margins, pared early-session gains, a trader said.
The government’s morning direct market hog price data was unavailable. Hogs in the Midwest early Thursday traded mixed, hog dealers said.
May hogs closed 1.075 cents/lb. lower at 122.9.
Most-actively traded June ended 0.7 cent lower at 125.55 cents, and July down 0.05 cent to 123.95 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.