LIVESTOCK-U.S. live cattle futures up as cash keeps climbing

* Cattle recovering from steep slide
    * Feeder cattle follow live cattle higher
    * Hog futures ease in anticipation of seasonal slide

    By Sam Nelson
    CHICAGO, May 9 (Reuters) - Chicago Mercantile Exchange (CME)
live cattle futures posted tentative gains on Thursday on a
rebound from the steep slide since the month began and continued
strength in the cash markets, traders and analysts said. 
     "It was oversold, due for a correction, and obviously we're
(futures) a long way under the cash market," said Jim Clarkson a
broker for A&A Trading.
     Spot June cattle had fallen 3 percent over the past
week to reach a one month low during Wednesday's session and underwent a corrective short-covering bounce on Thursday. CME live cattle for June delivery were up 0.350 cent per lb at 120.550 cents per lb. Feeder cattle futures also rose, despite soaring Chicago Board of Trade corn, which usually weighs on feeders due to the implications of higher feed costs that can trim demand for young cattle to place in commercial feedots. CME feeder cattle for May delivery were up 0.150 cent per lb at 135.750 cents per lb. Traders said an interesting battle was taking shape pitting the bearish perceptions that may stem from possible reduced demand for beef due to record high wholesale beef prices. And bullish ideas stemmed from the soaring beef prices and approach of warmer weather in the U.S. that usually spurs a hike in demand for choice and prime cuts of meat for grilling season. The U.S. Department of Agriculture's (USDA) wholesale beef market report on Thursday morning showed choice beef carcasses rising 24 cents per cwt to a record $204.91 per cwt above the previous record of $204.67 hit late on Wednesday. "The record high choice beef is eventually going to cut into
demand and that's what the lower cattle futures are telling you," said Dennis Smith, a broker for Archer Financial. "The high beef prices are going to lead to a massive switch to pork and chicken," he said. A small number of cash cattle in Texas and Kansas moved at $126 per cwt, down $2 from last week, feedlot sources said. Bids stood at $126 for unsold cattle in both states and elsewhere in the Plains against $130 asking prices, they said. "I also see cash steer prices pulling back from the $130 area soon," Smith said. U.S. beef profit margins on Thursday were a positive $13.65 per head versus a negative $9.80 on Wednesday and a positive $3.75 a week ago, according to Denver-based livestock marketing advisory service HedgersEdgecom LLC. USDA reported the Thursday cattle slaughter at an estimated 119,000 head, versus 119,000 a week ago and 129,000 a year ago. HOG FUTURES EASE ON SEASONAL ANTICIPATION CME lean hog futures eased in all months except thinly traded spot May, which posted a modest 0.025 cent per lb advance to 92.000 cents per lb. Actively traded June was down 1.200 cents per lb at 90.575 cents per lb. The downturn in hog futures occurred despite another jump in cash hog markets.
"Cash hogs continue very strong and it's kind of a dog fight as to whether there is more up to the cash market or not," Clarkson said. Cash hogs traded steady to $2 per cwt higher in the U.S. Midwest on Thursday amid strong packer demand as milder weather around the country bolstered demand for pork for outdoor grilling, dealers said. Packers were also bidding aggressively for hogs ahead of the Memorial Day holiday on May 27, traditionally a big grilling weekend. "Cash hogs were strong yesterday, today and probably will be strong the rest of the week but the seasonal peak is probably in. There's anticipation cash hogs, cutout (wholesale pork) and futures will be lower next week, it's just a normal seasonal decline," Smith said referring to the downturn in futures and expected seasonal downturn in cash soon. U.S. pork profit margins on Thursday were a negative $12.40 per head versus a negative $11.20 on Wednesday and a negative 6.45 a week ago, according to Denver-based livestock marketing advisory service HedgersEdgecom LLC. USDA reported the Thursday hog slaughter at an estimated 412,000 head, versus 410,000 a week ago and 419,000 a year ago. (Additional reporting by Karl Plume in Chicago; Editing by Marguerita Choy)

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