CHICAGO, June 29 (Reuters) – Chicago Mercantile Exchange live cattle futures rose for a third day in a row on Wednesday, with help from expectations of steady or better cash prices by week’s end, traders said.
June live cattle, which expires on Thursday, closed 1.825 cents per lb higher at 118.900 cents. Most actively traded August ended up 1.400 cents to 114.125 cents.
Healthy packer margins, futures’ recent uptrend and significantly less market-ready, or cash, cattle for sale than last week could support cash prices, said traders and analysts.
Beef packer margins for Wednesday, on average, were a positive $74.10 per head, up from a positive $85.45 on Tuesday, as calculated by HedgersEdge.com.
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Chicago Board of Trade corn futures extended slight gains on Tuesday as short covering and bargain buying continued to support a rebound from contract lows reached during the previous session.
Still, some investors were skeptical that packers will pay more than they have to based on lackluster wholesale beef demand and one less slaughter day because of Monday’s July Fourth holiday.
The morning’s choice beef price was at $209.38 per cwt, $1.34 higher than on Tuesday. Select cuts slipped 29 cents to $196.15, the U.S. Department of Agriculture said.
CME live cattle drew more support from feeder cattle futures’ steep climb.
“You have to look at feeder cattle and say that’s where the driver is, in part coming from cheaper corn,” said CHS Hedging analyst Steve Wagner.
Technical buying, the corn price’s abrupt retreat and live cattle futures’ advances also boosted CME feeder cattle for a third consecutive session. August feeders closed 2.375 cents per lb higher at 143.050 cents.
CME lean hogs sagged in anticipation of softer cash prices following the morning’s wholesale pork price drop and as plants prepare to shut down for Monday’s holiday, traders said.
July ended down 0.050 cent per lb to 83.100 cents, and August closed 0.650 cent lower at 83.325 cents.
Cash hogs in the Midwest Wednesday morning traded steady to down 50 cents per cwt, according to regional hog buyers.
Wednesday morning’s wholesale pork price slumped $2.28 per cwt from Tuesday to $88.58 per cwt, mainly hit by almost $6 lower ham prices, USDA said.
Most supermarkets wrapped up pork purchases for Fourth of July grilling demand, and are waiting to see how much of it cleared meat cases over the holiday, said traders.
CME lean hogs were further pressured by some investors who sold those contracts and simultaneously bought live cattle futures in a strategy known as spreading.
