By Theopolis Waters
CHICAGO, July 1 (Reuters) – Chicago Mercantile Exchange live cattle on Tuesday recovered from Monday’s losses, supported by anticipation of steady-to-better prices for market-ready or cash cattle as beef prices set new highs, traders said.
Last week, cash cattle in the U.S. Plains fetched a record-high $155 per hundredweight (cwt).
Profitable packer margins and fewer cattle for sale this week bode well for cash prices. And, packers are buying supplies for the first full week of production after the U.S. July Fourth holiday.
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Chicago Mercantile Exchange cattle futures declined for a second straight session on Wednesday in a profit-taking and technical-selling correction from recent highs.
The morning’s wholesale price for choice beef was at $247.77 per cwt., up 49 cents from Monday’s record. Select beef hit $240.42, surpassing Monday’s high by $1.51, according to the U.S. Department of Agriculture.
Packers passed on record-high cattle prices to beef end users, and less beef is available after processors cut kills to counter tight supplies.
“The big question is how is beef demand going to hold up at these prices going through the softer demand period of the year,” said AgriVisor Services Inc. analyst Dale Durchholz.
August live cattle finished 1.425 cents per pound higher at 151.500 cents, and October up 1.950 cents to 155.075 cents.
CME feeder cattle settled up the 3-cent per pound maximum daily price limit, fueled by the live cattle futures’ rebound and lower corn prices.
The bottoming out of corn prices may dictate how much traders are willing to buy feeder cattle futures, Durchholz said.
Futures drew more support from sharply higher prices for cash feeder cattle in local markets.
August and September closed 3.000 cents per lb. higher at 215.775 and 217.000 cents, respectively.
FRONT MONTH HOGS DOWN, OTHERS UP
CME July and August hog futures settled lower on profit-taking and lower cash prices, traders said.
Tuesday morning’s average hog price in the Iowa/Minnesota market slumped $2.73 per cwt. from Monday to $123.97, USDA said.
Packing plant shutdowns at least one day this week for the holiday means packers will need fewer animals for production.
Supermarkets are buying small amounts of pork until they determine how much product sold during the holiday.
Fund liquidation hastened August future’s losses. And, traders sold August and simultaneously bought back months in a trading strategy known as bear spreading.
Expectations of tight hog supplies beginning this fall in the wake of the Porcine Epidemic Diarrhea virus lifted deferred futures contracts.
July hogs closed down 1.600 cents per lb. lower at 131.050, and August 2.400 cents lower at 130.425 cents. October finished up 0.250 cent to 114.150 cents, and December 1.250 cents higher at 99.850.
