CME live cattle end higher after wild ride; hogs upCHICAGO - Chicago Mercantile Exchange live cattle futures settled higher on Tuesday after a choppy session in which anticipation of stronger cash prices overshadowed slack wholesale beef demand, traders said.
By: Theopolis Waters, Reuters
CHICAGO - Chicago Mercantile Exchange live cattle futures settled higher on Tuesday after a choppy session in which anticipation of stronger cash prices overshadowed slack wholesale beef demand, traders said.
August closed up 0.575 cent per lb at 151.075 cents, and October 0.550 cent higher at 154.025 cents.
Fewer market-ready, or cash, cattle for sale this week and still profitable packer margins helped support cash prices, analysts and traders said.
Seasonally declining wholesale beef demand and plentiful less-costly pork may cause some processors to curb cash spending, an analyst said.
Last week, cash cattle in the U.S. Plains moved at $148 to $153.50 per cwt, feedlot sources said.
Beef packer margins for Tuesday were at a positive $56.80 per head, compared with a positive $86.55 on Monday, as calculated by HedgersEdge.com.
Tuesday morning's wholesale choice beef price, or cutout, sagged 99 cents per cwt from Monday to $246.66. Select cuts slumped $2.24 to $241.68, the U.S. Department of Agriculture said.
"I don't know where the cash will trade this week, but the wholesale beef is really starting to come undone," said Archer Financial Services broker Dennis Smith, citing the four-day slide in beef cutout values.
Futures reversed initial losses that were pegged to economic concerns about Greece and China that pumped up the dollar, which could hurt U.S. exports, a trader said.
CME feeder cattle were supported by subsequent live cattle futures buying, but pressured by the exchange's feeder cattle index for July 3 at 221.81 cents, down from 223.29 cents for July 2.
August closed up 0.150 cent at 217.125 cents, and September down 0.050 cent at 215.525 cents.
CME lean hogs drew support from higher cash price expectations, even though some packers have all they need for this week, traders said.
July closed 0.525 cent per lb higher at 79.250 cents, and August up 0.350 cent at 76.350 cents.
Tuesday morning's cash hog prices in the Midwest were higher than on Monday, regional hog dealers said.
But the average cash hog price in Iowa/Minnesota on Tuesday morning tumbled $3.17 per cwt in light volume from Monday to $73.96, according to the USDA.
July futures were guided by sentiment about where it will settle in relationship to CME's lean hog index when the contract expires on July 15.
The August contract benefited from its modest discount to CME's hog index for July 2 at 77.13 cents.