By Theopolis Waters
CHICAGO, Feb 11 (Reuters) – Chicago Mercantile Exchange live cattle futures rose on Tuesday, driven by cash price optimism that offset modest early-session losses, traders said.
They said Tuesday’s cash cattle bids of $141 per hundredweight (cwt) in Kansas encouraged bullish futures investors.
Last week, a small number of cattle in the U.S. Plains sold at mostly $141 per cwt., feedlot sources said.
This week, market-ready steers and heifers might fetch at least $142 per cwt. in Texas and Kansas based on still negative but improved packer margins, traders and analysts said.
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And, they said, grocers are expected to restock meat cases next week as temperatures moderate in parts of the country, which could help cushion the beef cutout’s recent fall.
Beef packer margins for Tuesday were estimated at a negative $74.30 per head, compared with a negative $112.25 per head on Monday and a negative $57.00 a week ago, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price, or cutout, was $210.02 per cwt., down $1.14 from Monday. Select cuts were at $209.17, up 16 cents, based on U.S. Department of Agriculture data.
“This beef market that suggests it has bottomed is a bit of a stretch,” said John Kleist, senior analyst with EBOTTrading.com.
“The problem is higher retail prices are out there and they’ll be out there for a while,” he said.
Short-covering and fund buying strengthened CME live cattle.
February live cattle closed up 1.300 cents per lb. to 142.800 cents and April ended 1.000 cent higher at 141.175 cents.
CME feeder cattle drew support from live cattle market gains and steady to higher prices for feeder cattle in local markets.
Technical buying and weak Chicago Board of Trade corn provided more feeder cattle futures support.
March ended up 0.875 cent per lb. at 168.775 cents,
and April finished at 169.650 cents, 0.850 cent higher.
HOGS BOW TO PREMIUMS
CME hog futures’ premiums to the exchange’s hog index at 84.54 cents discouraged buyers ahead of the February contract’s expiration on Feb. 14, traders said.
February hogs closed at 86.075 cents per lb., down 0.275 cent, and April ended at 94.175 cents, 0.575 cent lower.
The morning’s pullback in wholesale pork values and uncertainty regarding cash prices in the near term kept would-be buyers on the defensive.
Some packers need hogs for this week’s production while others have inventories met into early next week, a trader said.
Profit taking undercut summer hog contracts that spiked to new highs on Monday in anticipation of tighter supplies as the Porcine Epidemic Diarrhea virus (PEDv), which is fatal to baby pigs, spreads on U.S. and Canadian hog farms.
“We’re maintaining premiums because of the PEDv virus, but no one knows for certain how much it is impacting the industry,” said Kleist.
