By Theopolis Waters
CHICAGO, May 28 (Reuters) – Chicago Mercantile Exchange feeder cattle Wednesday hit a record high on fund buying after contracts broke through technical resistance levels, traders said.
“(The) technical aspect of the feeder cattle market looks fine,” said Citigroup futures specialist Sterling Smith.
Fundamentally, young calves for feeding will be in demand given generally weak corn prices and current prices for slaughter-ready or cash cattle, he said.
CME feeder cattle drew more support from short-covering and firm live cattle futures.
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August ended 2.075 cents per pound higher at 195.575, and above the 10-day moving average of 194.423 cents.
September closed up 1.700 cents at 196.500 cents per lb., and surpassed the 10-day moving average of 195.535 cents.
LIVE CATTLE UP WITH BEEF DEMAND
CME live cattle ended higher, supported by short-covering in response to strong wholesale beef prices, traders said.
The afternoon wholesale choice beef price rose $1.19 per hundredweight (cwt) from Tuesday to $234.31. Select cuts climbed $1.50 to $224.15, said the U.S. Department of Agriculture.
Intentional packer cutbacks, to offset tight supplies, and improved beef demand for spring cookouts lifted wholesale beef values, traders and analysts said.
Futures’ discount to recent cash cattle prices encouraged buyers.
On Tuesday, cash cattle in Nebraska moved at $143 per cwt., down $2 to $3 from last week.
Cash bids in Texas and Kansas surfaced at $141 to $143. Last week, cash cattle in both states fetched $144 per cwt.
Packers will resist raising bids for cattle this week because there are more of them for sale, traders said.
June closed up 0.550 cent per lb at 136.150 cents. August finished up 0.350 cent at 137.100.
HOGS SLUMP ON CASH, PORK PRICES
CME hogs settled lower as cash prices weakened, traders said.
The afternoon’s average hog price in the Iowa/Minnesota market slipped 37 cents per cwt. from Tuesday to $108.18, according to the USDA.
Some packers have sufficient supplies due to a glut of hogs that developed over the Memorial Day holiday weekend.
Heavier hogs helped offset fewer animals attributed to the deadly Porcine Epidemic Diarrhea virus, which sidelined would-be futures buyers.
Futures were overpriced based on CME’s hog index at 111.22 cents, which also deterred buyers.
Funds sold after nearby contracts dropped below moving average support levels.
Those same moving averages will be key resistance barriers to potential short-covering on Thursday, a trader said.
June finished 1.950 cents per lb. lower at 114.550 cents and below the 100-day moving average of 115.646 cents. July ended 2.150 cents lower at 121.275 and below the 40-day moving average of 122.459.
