CHICAGO, Aug 11 (Reuters) – Chicago Mercantile Exchange contracts on Friday landed in positive territory for the first time in five sessions, helped by short-covering and bargain buying, said traders.
“We’ve had a big down week. I think this a kind of dead cat technical bounce (temporary recovery) ahead of the weekend,” Midwest Marketing Solutions analyst Brian Hoops said regarding Friday’s market gains.
Buyers were attracted to futures that under priced, or at a discount, compared to this week’s prices for slaughter-ready, or cash, cattle. Funds bought the October contract after it surpassed the 200-day moving average of 107.170 cents.
August ended 0.875 cent per pound higher at 109.725 cents, and October closed up 0.800 cent higher at 107.400 cents.
This week cash cattle in the U.S. Plains brought $114 to $116 per cwt compared to $116 to $119 last week.
Plentiful near-term supplies, and the outlook for increased numbers ahead, discouraged packers from bidding up for cattle this week, said analysts and traders.
The U.S. Department of Agriculture estimated this week’s cattle slaughter at 641,000 head, 62,000 more than a year ago.
Market participants await the end of seasonally sluggish wholesale beef demand as grocers buy meat for Labor Day – the summer’s last official grilling holiday.
CME feeder cattle broke its five-session losing streak, led by live cattle futures’ turnaround.
August feeders closed 0.600 cent per pound higher at 141.775 cents.
CME lean hogs gained modestly, helped by their price discounts to the exchange’s hog index for Aug. 9 at 85.50 cents, traders said.
Investors bought nearby hog contracts and simultaneously sold deep-deferred months in anticipation of a supply buildup later this year.
People are concerned about bigger supplies ahead, but a new packing plant coming online during the fourth quarter should allow the industry to handle the increased numbers, said Hoops.
August, which expires on Monday, closed up 0.200 cent per pound to 84.650 cents. Most actively traded October ended 0.650 cent to 68.625 cents.