By Theopolis Waters
CHICAGO, Feb 1 (Reuters) – Chicago Mercantile Exchange live cattle futures gained moderately on Monday, following an up-and-down session that was ultimately supported by last week’s cash price strength, traders said.
February live cattle closed up 0.375 cent per lb to 135.675 cents, and April ended 0.425 cent higher at 134.425.
“It is a tough market to figure out, while at the same time we have extreme volatility which means a wrong position costs a lot,” said Joe Ocrant, president of the Oak Investment Group.
Last Friday, some processors in the U.S. southern Plains bought market-ready, or cash, cattle for $138 per cwt, up from $130 to $134 a week earlier, feedlot sources said.
A few packers needed cattle after not buying enough of them the week before, and others purchased animals ahead of wintry weather expected to slam the central Plains later on Monday, according to traders and analysts.
But some processors delayed buying cattle until this week while focusing on stabilizing their sliding margins and lifting wholesale beef values, they added.
Monday’s average beef packer margin was a negative $22.55 per head, down from a negative $15.40 for Friday and a positive $69.30 a week ago, as calculated by HedgersEdge.com.
The morning’s wholesale choice beef price rose $1.03 per cwt from Friday to $219.79. Select cuts slumped $1.94 to $215.19, based on U.S. Department of Agriculture data.
As the morning progressed, investors shrugged off selling tied to initial U.S. stock market losses and Friday’s bearish USDA semiannual cattle inventory report.
Subsequent live cattle market gains and steady-to-better cash feeder cattle prices underpinned CME feeder cattle futures. March feeders closed 0.525 cent per lb higher at 157.775.
HOG FUTURES CLOSE UNEVEN
CME lean hogs felt pressure from profit-taking and futures’ premiums to the exchange’s hog index for Jan. 28 at 61.07 cents, said traders.
Firm wholesale pork prices and possible weather-related livestock production disruptions minimized front-month futures losses, they said.
Spot February finished 0.450 cent per lb lower at 65.350 cents, April ended unchanged at 70.700 cents and May closed up 0.150 cent to 77.000.
The morning wholesale pork price on Monday was up 34 cents per cwt from Friday to $77.35, helped by more than $2 higher pork belly costs, USDA said.
Cash hogs in the Midwest on Monday morning sold mostly steady as packers gauge supply availability for this week, according to regional hog dealers.
