CHICAGO (Reuters) — Chicago Mercantile Exchange live cattle futures on Monday finished higher for a third session in a row, supported by spillover short-covering from late last week, traders said.
August live cattle ended 1.000 cents per lb higher at 151.600, and October was up 0.800 cent at 148.550 cents.
Futures were underpriced to last week’s prices for market-ready, or cash, cattle, which attracted buyers.
Last week, cash cattle in the U.S. Plains sold at mostly $155 to $156 per hundredweight, $4 to $5 lower than the week before, feedlot sources said.
Market participants await cash cattle prices this week that some traders believe may be close to bottoming out following two weeks of losses.
“Traders had to rationalize futures’ discount to cash and have to decide whether the drop in cash last week was a correction or the beginning of a down move,” said Oak Investment Group president Joe Ocrant.
Cash prices in recent weeks declined faster than wholesale beef values, which enhanced packer margins.
Beef packer margins for Monday were a positive $70.75 per head, compared with a positive $61.20 on Friday and a positive $35.35 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
Traders are tracking wholesale beef prices for signs that grocers have most of the product they need to feature for Labor Day holiday cookouts.
CME feeder cattle futures also closed higher for a third successive session, supported by live cattle market advances and lower corn prices.
Traders cited steady to $4 per cwt higher prices for feeder cattle in local markets.
August closed up 0.800 cent per lb at 218.025 cents, and September at 216.075 cents, 0.975 cent higher.
CME hog futures settled mixed, supported by their discounts to CME’s hog index at 114.70 cents but pressured by deteriorating cash and wholesale prices, traders said.
October ended up 0.150 cent at 95.100 cents per lb, and December down 0.175 cent at 88.875 cents.
Monday afternoon’s average price of hogs in the Iowa/Minnesota market fell $1.81 per cwt from Friday to $101.85, the USDA said.
Separate government data showed the afternoon’s wholesale pork price slid 78 cents per cwt from Friday to $111.02.
After cutting kills and allowing heavier hogs, packers have enough supplies to make up for an estimated eight million pigs killed by the porcine epidemic diarrhea virus since May 2013, a Midwest hog dealer said.
Downward spiraling hog prices prompted farmers to move animals to market earlier than they would have otherwise, he said.
Bullish traders believe that eroding hog prices will stabilize when retail pork demand improves and packers buy supplies before closing plants during the three-day Labour Day holiday.