CHICAGO, Jan 17 (Reuters) – Chicago Mercantile Exchange nearby live cattle contracts on Tuesday climbed to their highest level in 10 months after investors digested last week’s better-than-expected cash prices, traders said.
February live cattle closed 1.050 cents per pound higher at 119.575 cents, and April up 1.075 cents to 119.000 cents.
“It was a good cash market that happened after the futures market had closed on Friday,” said Archer Financial Services broker Dennis Smith.
Last Friday packers paid $118 to $120 per cwt for slaughter-ready, or cash, cattle in the U.S. Plains that a week earlier brought mostly $118.
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Average beef packer margins for Tuesday were a negative $9.45 per head, up from a negative $14.00 on Monday and down from a positive $21.45 a week ago, as calculated by HedgersEdge.com.
Despite their poor margins, processors raised cash bids due to insufficient inventories and improved beef cutout values prior to Tuesday, traders and analysts said.
Tuesday morning’s choice wholesale beef price, or cutout, was up 38 cents per cwt from Monday at $191.77. Select cuts slipped 29 cents to $187.17, the U.S. Department of Agriculture said.
Investors expect steady-to-firmer cash prices this week based on roughly 24,000 fewer cattle for sale than last week. They added that ice and heavy rain in parts of the Plains and Midwest over the weekend disrupted livestock production.
The USDA revised Monday’s estimated cattle slaughter downward to 69,000 from 72,000 head.
Investors await Wednesday’s sale of 4,100 cattle at the Fed Cattle Exchange, where animals last week on average fetched $119 per cwt.
Buy stops and live cattle futures advances pulled up CME feeder cattle.
January feeders ended up 0.475 cent per pound to 130.925 cents.
Short-covering and buying in CME’s neighboring live cattle market supported the exchange’s hog contracts, traders said.
They said lower wholesale pork values and cash price uncertainty capped market gains.
February hogs ended up 0.200 cent per pound to 65.800 cents, and April up 0.100 cent to 69.725 cents.
Tuesday morning’s cash hog price in Iowa/Minnesota averaged $62.19 per cwt, down 7 cents from Monday, but was up 11 cents in the western Corn Belt at $62.09, the USDA said.
Separate U.S. government data on Tuesday morning showed the average wholesale pork price fell $1.70 to $78.24 from Monday, with price declines for all categories listed except ribs and pork bellies.
