U.S. livestock: Firm beef prices help drive CME live cattle higher

Chicago | Reuters — Chicago Mercantile Exchange live cattle closed higher on Friday, a move fuelled partly by an uptick in wholesale beef prices, traders said.

The morning’s wholesale choice beef price, or cutout, rose 64 cents per hundredweight (cwt) from Thursday to $231.53. Select cuts gained 29 cents to $223.89, the U.S. Department of Agriculture said.

Reduced kills and supermarkets preparing to feature beef for summer grilling supported the cutout, a trader said.

CME live cattle fed off Thursday’s better-than-anticipated prices for slaughter-ready or cash cattle, he said.

Cash cattle in Texas and Kansas fetched $148/cwt, $3 higher than a week ago. Cash cattle in Nebraska moved at mostly $149 to $150, up $3 to $4 from last week.

Futures drew more support from fund buying and CME feeder cattle market advances, traders and analysts said.

Live cattle investors are eying the market’s 75 relative strength index (RSI) reading. An RSI above 70 suggests futures are technically overbought and subject to a downward correction.

June ended at 147.6 cents, up 1.6 cents, and August closed 1.575 cents higher at 146.625.

CME feeder cattle reached a new high, supported by live cattle futures, solid cash feeder cattle prices and removal of hedged positions.

“Guys are getting out of their hedges figuring the market would stop at 185 to 200 cents, and it hasn’t,” said U.S. Commodities analyst Dax Wedemeyer.

August finished 2.3 cents per pound higher at 208.15 cents, and September was up 2.2 cents at 208.725 cents.

Tight supply outlook lifts hogs

CME hogs settled higher in anticipation of tight supplies pegged to the porcine epidemic diarrhea virus, traders said.

Some investors think there is going to a shortage of hogs, said independent livestock futures trader Dan Norcini. But hog farmers have likely increased production given the current level of hog futures and affordable corn, he said.

CME hogs made headway despite the morning’s lower prices for market-ready hogs and unstable wholesale pork values.

USDA’s Friday morning average hog price in the closely watched Iowa/Minnesota market was down 41 cents/cwt from Thursday at $116.25.

USDA data on Friday morning showed wholesale pork prices at $120.88/cwt, down $2.57 from Thursday.

Packers may have all the hogs they need early next week after significantly cutting kills on Friday and Saturday, a trader said.

Retailers are not booking large amounts of product due to high prices and as bouts of cool wet weather dampen grilling demand, he said.

Thinly traded June hogs, which expired at noon CT, settled down 0.075 cent/lb. at 115.9 cents. July closed up 1.075 cent at 127 cents, and August at 131.275 cents, 0.475 cent higher.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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