By Theopolis Waters
CHICAGO, March 1 (Reuters) – Most Chicago Mercantile Exchange live cattle futures closed firmer on Wednesday, after investors sold April futures and simultaneously bought deferred months.
Investors held off buying April futures despite strong wholesale beef values and steady-to-better cash price expectations for this week.
April live cattle closed 0.350 cent per pound lower at 117.575 cents. June finished up 0.250 cent to 107.800 cents and August 0.575 cent higher at 103.000 cents.
The morning’s Choice wholesale beef price climbed $2.02 per cwt to $206.75 from Tuesday. Select cuts were up $1.25 to $202.60, the U.S. Department of Agriculture said.
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Bullish near-term fundamentals are encouraging, but the April contract suggests weaker cash prices during at that time, a trader said.
“Better margins and good beef demand are incentives for packers to pay a little bit more for cattle this week. But there are more cattle for sale this week too,” he said.
Wednesday morning’s Fed Cattle Exchange set the tone for this week’s cash prices after animals, on average, brought $125.
Other packers in the U.S. Plains bid $125 per cwt. for remaining slaughter-ready, or cash, cattle that were priced at $128. Cash cattle a week earlier fetched $124 to $125.
Wednesday’s average beef packer margins were at a negative $3.05 per head, up from negative $19 on Tuesday, as calculated by HedgersEdge.com.
Profit-taking and higher corn prices dropped CME feeder cattle.
March feeders closed down 0.575 cent per pound to 124.500 cents.
FIRMER HOG FUTURES CLOSE
Short-covering and Wednesday’s cash price rebound lifted CME lean hogs, said traders. April hogs ended 0.825 cent per pound higher at 68.425 cents. May closed up 0.175 cent to 74.125 cents. Wednesday morning’s cash hog price in Iowa/Minnesota averaged $69.06 per cwt, 60 cents higher than on Tuesday, the USDA said.
Packers could use a few hogs for the second half of the week, especially as their margins grow, a Midwest hog merchant said.
Unfortunately, fluctuating pork belly prices are impacting the pork cutout – a factor used in determining packer profits, he said. U.S. government data on Wednesday morning showed the average wholesale pork price fell 67 cents per cwt. to $81.27 from Tuesday, mostly because of $5.15 lower pork bellies.
HedgersEdge.com calculated Wednesday’s average pork packer margin at a positive $23.25 per head, up from a positive $18.65 on Tuesday and a positive $16.30 a week ago.
