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Beef price upswing snaps CME cattle losing skid; hogs higher

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Published: July 14, 2015

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By Theopolis Waters

CHICAGO, July 14 (Reuters) – For the first time in five sessions Chicago Mercantile Exchange live cattle futures landed in positive territory on Tuesday, helped by the turnaround in wholesale beef values, traders said.

August closed 0.550 cent per pound higher at 147.150 cents, and October up 0.600 cent lower to 150.325 cents.

Tuesday morning’s wholesale Choice beef price, or cutout, gained 63 cents per cwt from Monday to $236.63. Select cuts rose $1.58 to $234.28, the U.S. Department of Agriculture said.

Not since July 1 has the beef cutout posted an increase, based on USDA data.

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Cattle at a feedlot near North Platte, Nebraska. (AndrewLinscott/iStock/Getty Images)

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Cattle futures climbed again on Friday as USDA data showed a continued decline in cattle on feed. Hogs also rose.

“Beef being up may be a forced deal as packers looked to offset lost margins by charging wholesalers more for product,” a trader said.

Despite the day’s beef and futures run up, investors see processors controlling cash spending this week because of their unprofitable margins and more cattle for sale.

Processors have not bid for cattle in Texas and Kansas that were priced at $152 to $153 per hundredweight (cwt), feedlot sources said. A week ago, U.S. Plains cattle moved at $150 to $151.50.

Beef packer margins for Tuesday were at a negative $56.60 per head, compared with a negative $51.75 on Monday and a positive $56.80 a week ago, as calculated by HedgersEdge.com.

CME feeder cattle were supported by live cattle market buying and slumping corn prices.

August closed 3.075 cents per lb higher at 214.300 cents.

BARGAIN HUNTERS LIFT HOG FUTURES

CME lean hogs finished higher on technical buying and deferred-month bargain hunting, traders said.

July, which will expire on Wednesday, ended up 0.850 cent per lb to 79.925 cents, and August 1.975 cents higher at 75.925 cents.

“Futures may be realizing that we’ll see further cuts in production due to corn prices,” said Allendale Inc market strategist Rich Nelson.

Corn prices on Tuesday tumbled 10 cents per bushel, but hit fresh contract highs in Monday evening’s electronic session, he said.

In spite of Tuesday morning’s soft cash prices, some packers may be forced to compete for hogs in the near term as warmer weather crimps supplies, traders and analysts said.

The average price of cash hogs in Iowa/Minnesota on Tuesday morning were at $77.59 per cwt, down 51 cents from Monday, the USDA said.

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