Chicago | Reuters — Chicago Mercantile Exchange live cattle futures ended higher on Tuesday for the first session in the past nine, aided by short-covering and fund-buying, traders said.
“I think that the major reason for the rally is the extreme oversold condition of the cattle futures,” said Joe Ocrant, president of Oak Investment Group.
Investors said caution about this week’s prices for slaughter-ready, or cash, cattle pulled futures off the morning’s highs.
December live cattle finished down 0.975 cent/lb. at 116.15 cents (all figures US$). February ended 1.425 cents higher at 119.15 cents.
A few cash cattle bids in Texas and Kansas surfaced at $114/cwt on Tuesday, down from last week’s trade in the U.S. Plains of $115-$118.
The Fed Cattle Exchange sale of roughly 700 animals on Wednesday might offer an indication of the week’s cash cattle prices overall.
For the most part, processors will need fewer animals before plants shut down during the Christmas and New Year holidays, traders and analysts said.
Generally dry conditions in the Plains created less stress on cattle in feedlots, which allows them to put on weight quicker while pumping more meat into the retail pipeline, they said.
Market bulls hope Tuesday’s futures rally, improved packer margins and less cattle for sale than last week underpin cash prices in parts of the Plains.
CME feeder cattle contracts drew support from buy stops, short-covering and live cattle futures gains.
January feeder cattle closed up 1.65 cents/lb. at 147.1 cents.
Hog futures mostly weaker
Lower cash prices and softer wholesale pork demand pressured CME lean hog contracts, except thinly-traded December that is set to expire on Thursday, said traders.
Sell stops and technical selling contributed to futures’ weakness, they said.
December hogs finished up 0.15 cent/lb. at 63.75 cents. Most actively-traded February closed down 0.5 cent, to 66.525 cents, and below the 100-day moving average of 66.886 cents. April ended 0.65 cent lower at 71.175 cents.
Farmers are moving hogs to market earlier than they had planned as cash prices trend lower heading into back-to-back holiday plant closures, a trader said.
Wholesale pork belly prices fell sharply on Monday and Tuesday, a sign that end-users balked at storing bellies in freezers for later use following the run up in prices in recent weeks, he said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.