CHICAGO, Oct 7 (Reuters) – Chicago Mercantile Exchange live cattle closed higher on Wednesday, fueled by active short-covering in anticipation of cash and wholesale beef prices bottoming out soon, traders said.
Spot October finished 4.225 cents per lb higher at 129.350 cents, and December up 2.925 cents at 136.150.
“So many of these holders of short positions have been waiting for a sign to get out,” said Allendale Inc chief strategist Rich Nelson, citing Tuesday’s beef cutout price spike that turned lower on Wednesday.
Wednesday morning’s wholesale choice beef price, or cutout, dropped 81 cents per cwt from Tuesday to $203.36. Select cuts fell $1.13 to $197.74, the U.S. Department of Agriculture said.
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However, the morning’s cutout sales volume of 190 loads was the most this year, surpassing 161 on Sept. 23, based on USDA data.
On Wednesday, market-ready, or cash, cattle bids in the U.S. Plains were at $118 per cwt versus $125 asking prices, feedlot sources said. Last week, cash cattle in the Plains moved at mostly $118 to $124.
Investors believe the imminent seasonal turnaround in beef demand could bode well for cash cattle prices that in recent weeks have buckled under burdensome heavyweight animals and competitively-priced pork.
“Relief may come at some point for cash (cattle). But, I don’t see packers paying $129 per cwt this week, even with their good margins,” a trader said.
Soft corn prices and more live cattle futures buying sent CME feeder cattle futures sharply higher, with October ending at 184.950 cents per lb, up 2.425 cents.
GENERALLY LOWER HOG SETTLEMENT
CME lean hogs finished mostly lower, pressured by uncertainty regarding cash and wholesale pork prices as hog supplies grow seasonally, traders said.
They said October, set to expire on Oct. 14, was supported by its discount to the exchange’s hog index for Oct. 5 at 73.75 cents.
Spot October closed up 0.225 cent per lb to 73.825 cents, December down 0.750 cent to 65.975 cents and February finished 1.000 cent lower at 68.825.
USDA quoted Wednesday morning’s average cash hog price in the Iowa/Minnesota market at $71.34 per cwt, up 33 cents from Tuesday.
The government quoted the morning’s wholesale pork price at $86.37 per cwt, 66 cents lower than on Tuesday.
Packers are “filling holes” for this week’s slaughter, and supermarkets are buying pork for immediate needs while preparing to advertise more beef in November, a trader said.
