CME live cattle futures rebound; hogs move upCHICAGO - Chicago Mercantile Exchange live cattle closed higher on Tuesday, erasing Monday's losses aided by short-covering and futures' discounts to cash prices a week ago, traders said.
By: Theopolis Waters, Reuters
CHICAGO - Chicago Mercantile Exchange live cattle closed higher on Tuesday, erasing Monday's losses aided by short-covering and futures' discounts to cash prices a week ago, traders said.
April ended up 0.525 cent per lb to 161.000 cents, and June 0.850 cent higher at 151.125 cents.
Last week, market-ready, or cash, cattle in the U.S. Plains moved at $157 to $160.50 per hundredweight (cwt).
"June cattle may be too cheap. You have to prove to me that cash prices are going to fall dramatically to the level of the June contract," said Commodity Services Inc broker Rich Albaugh.
Investors expect packers to spend the same or less than last week for supplies that are expected to build seasonally.
Expensive beef at wholesale is struggling to win over retailers who are mulling less-costly pork and chicken.
Tuesday morning's choice wholesale beef price was at $258.13 per hundredweight (cwt), $1.24 higher than on Monday. Select cuts gained 6 cents to $248.04, the U.S. Department of Agriculture said.
In a trading strategy known as bear spreading, traders bought June and at the same time sold April that will expire on Thursday.
Bear spreads boosted June beyond the 20-day moving average of 150.36 cents, which sparked fund buying and buy stops.
CME feeder cattle finished strong, lifted by technical buying, higher cash feeder cattle prices and live cattle futures' upturn.
April, which also will expire on Thursday, closed up 1.075 cents per lb to 215.975 cents.
CME lean hogs ended higher in response to a fifth straight day of firmer cash prices, traders said.
May closed 1.475 cent per lb higher at 73.750 cents, and June up 0.500 cent to 79.900 cents.
Government data showed the morning's average cash hog price in Iowa/Minnesota was $1.09 per cwt higher than on Monday at $67.79.
"We had been beat down pretty hard until about a week ago, but packers now need to keep numbers flowing," a Midwest hog dealer said.
Packers on Monday and Tuesday processed a combined total of 858,000 hogs, 4,000 fewer than a week ago, according to USDA estimates.
Processors may need to pad their inventories, but doing so may come at the detriment of their margins if pork demand eases.
Separate government data reported the Tuesday morning wholesale pork price had dropped 42 cents per cwt from Monday to $70.44.