By Theopolis Waters
CHICAGO, June 23 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher on Monday after Friday’s U.S. Department of Agriculture report confirmed tight supplies ahead, traders said.
The cattle-on-feed report showed a seven percent drop in the number of animals placed in U.S. feedlots in May.
“We suspect the seven percent decline in placements is just a sign of lower placements through this summer,” said David Hales, author of the Hales Cattle Letter.
CME live cattle drew more support from upward-trending wholesale beef prices as retailers buy meat Fourth of July holiday grilling demand.
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The morning’s wholesale choice beef price rose $1.05 per hundredweight from Friday to $241.94. Select cuts jumped $2.79 to $236.16, based on USDA data.
Futures’ discount to recent returns for market-ready, or cash, cattle encouraged buyers.
Last week, cash cattle in Texas and Kansas traded at $150 per cwt, and $148 to $150 in Nebraska.
Beef demand is expected to peak soon after retailers buy all the product they need for the holiday, a trader said. Packers are not expected to buy cattle actively with plants scheduled to be closed during the holiday, he said.
USDA’s monthly cold storage report to be issued on Monday at 2 p.m. CDT will include May total beef and pork inventories.
June and August live cattle ended up 0.600 cent per pound at 148.150 and 146.925 cents, respectively.
CME feeder cattle drew support from higher live cattle futures and lower corn prices.
August closed up 1.025 cents per lb. at 207.900 cents, and September at 209.300 cents, 1.125 cents higher.
HOGS MIXED AFTER CHOPPY SESSION
CME hogs settled mixed after a volatile session, with July supported by steady to higher cash prices and the upturn in wholesale pork values, traders said.
USDA’s morning direct hog prices were unavailable. But cash hogs in the Midwest sold steady to $2 per cwt. higher, said dealers who cited strong packer demand ahead of next week’s holiday.
The morning’s wholesale pork price climbed $1.84 per cwt. from Friday to $129.32, USDA said.
Wholesale pork values turned higher after supermarkets bought product on an as-needed basis in anticipation of demand for July 4 cookouts.
“I suspect retailers are nervous about getting stuck with a lot of meat for the holiday given all the rain we’ve had in the Midwest in recent months,” a trader said.
August futures’ premium to CME’s hog index at 119.44 cents per lb.discouraged buyers.
Meanwhile, speculative buying before the government’s quarterly hog report on Friday, June 27, underpinned deep-deferred contracts.
July hogs closed up 0.475 cent per lb. at 128.300, and August down 0.175 cent at 128.975 cents.
