Chicago | Reuters — Chicago Mercantile Exchange live cattle closed lower Tuesday on profit-taking on the final trading session of the quarter, traders said.
April closed 1.175 cents per pound lower at 161.325 cents, and June 0.65 cent lower at 152.325 cents (all figures US$).
In a trading strategy known as bear spreading, investors sold April futures and simultaneously bought deferred months despite bullish cash price expectations for this week.
Talk that cash prices may be topping out seasonally pressured futures, said KIS Futures vice-president Lane Broadbent.
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Fewer market-ready (cash) cattle for sale and sharply higher wholesale beef values, as grocers prepare for spring grilling, are supportive cash price factors.
Last week, cash cattle in the U.S. Plains moved at $165 to $166 per hundredweight (cwt).
Tuesday morning’s choice wholesale beef price surged $2.43/cwt from Monday, to $254.13. Select cuts rose $1.02, to $248.64, according to the U.S. Department of Agriculture (USDA).
Plants closed over the Good Friday/Easter holiday will not need as many cattle, traders and analysts said.
On Good Friday last year, packers processed 100,000 head of cattle and 103,000 on Easter Monday, based on USDA’s data.
CME feeder cattle followed weaker live cattle futures and ignored sharply lower corn prices after the morning’s bearish government grain report.
“This is not good news for feeder cattle, especially when corn falls 17 cents. You would think this feeder cattle market would be a lot higher,” said Broadbent.
Cheaper feed is typically supportive for feeder cattle contracts because it encourages feedlots to buy calves to fatten for sale to packers.
April closed 0.5 cent/lb. lower at 218.125 cents.
Hogs up on short-covering
CME hogs finished higher on short-covering and fund buying, traders said.
April closed 1.125 cents/lb. higher at 62.425 cents, and May ended 0.525 cent higher at 68.725 cents.
Hog contracts advanced in the face of lower cash prices as processors pad inventories before the Easter holiday weekend, when a few plants are scheduled to be dark.
On Good Friday 2014, packers processed 385,000 hogs and 273,000 the Monday after Easter Sunday, according to the USDA.
Investors are eying wholesale demand for signs that low-cost pork is drawing shoppers from expensive beef as spring grilling gets underway.
Separate government data showed Tuesday morning’s wholesale pork price slipped 38 cents/cwt from Monday to $65.01, USDA said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
