CME live cattle futures climb as beef prices jumpCHICAGO - Chicago Mercantile Exchange live cattle futures closed higher on Tuesday, fueled by short-covering after the sharp rebound in wholesale beef prices, traders said.
By: Theopolis Waters, Reuters
CHICAGO - Chicago Mercantile Exchange live cattle futures closed higher on Tuesday, fueled by short-covering after the sharp rebound in wholesale beef prices, traders said.
June closed up 1.600 cents per lb to 155.075 cents, and August 1.275 cents higher at 152.875 cents.
Tuesday morning's wholesale choice beef price surged $3.84 per cwt from Monday to $247.95. Select cuts were at $241.72 up $5.41, topping the previous record increase of $5.13 set on Jan. 20, 2014, based on U.S. Department of Agriculture data.
Packing plant slowdowns to recoup lost margins made less beef available to retailers who are preparing to feature product for the July 4th U.S. holiday, traders and analysts said.
Processors needing market-ready, or cash, cattle might pay the same as last week while passing on that cost to wholesalers, they said.
But some packers may try to limit cash spending following recent slaughter cutbacks that resulted in nearly 40,000 more cattle for sale this week.
Last week, a few cash cattle in the U.S. Plains moved at $155 to $156 per cwt, USDA said.
Despite futures' recent rally, some of the day's buying was tied to their continued discounts to last week's cash prices, Doane Advisory Services economist Dan Vaught said.
"In that sense it makes some of these contracts look a bit cheap," he said.
August broke through the 10-day moving average of 151.66 cents, which ignited fund buying.
Technical buying, CME live cattle futures advances and steady to higher cash feeder cattle prices lifted exchange's feeder cattle contracts.
August ended 1.375 cents per lb higher at 224.225 cents.
Lower cash and wholesale pork prices weakened CME lean hogs, traders said.
June, which will expire on Friday, closed down 0.350 cent per lb to 81.200 cents, and July 1.000 cents lower at 79.975 cents.
USDA data reported Tuesday morning's average cash hog price in Iowa/Minnesota fell 98 cents per cwt from Monday to $78.02.
Separate government data quoted Tuesday afternoon's wholesale pork price at $85.03 per cwt, down 21 cents from Monday.
Several packers focused on next week's production after buying all they needed for this week, a trader said.
Increased seasonal supplies and higher weekly hog weights pumped more pork into the retail sector, he said.
July futures drifted below the 100-day moving average of 80.67 cents, triggering fund selling and sell stops.