By Theopolis Waters
CHICAGO, Aug 15 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher for a second straight session on Friday, with gains fueled by short-covering following deep market losses earlier in the week, traders said.
August live cattle ended 0.600 cent per pound higher at 150.600, and October was up 0.400 cent at 147.750 cents.
CME live cattle drew support from their price discounts to returns for market-ready, or cash, cattle, even though packers spent less for animals due to sufficient numbers of heavyweight cattle.
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“Producers continued to feed cattle longer to heavier weights. So, those heavier animals backed up in a lot of places,” said Linn Group analyst John Ginzel.
This week cash cattle in the U.S. Plains moved at mostly $155 to $156 per hundredweight (cwt.), down $4 to $5 from last week, feedlot sources said.
Also, prospects for a looming seasonal cattle supply increase, and slack wholesale beef demand after grocers buy all the product they need for Labour Day, pressured cash returns.
Friday afternoon’s choice wholesale beef price was at $255.54 per cwt, down $1.20 from Thursday. Select beef slipped 19 cents to $248.38, the U.S. Department of Agriculture said.
Traders bought the December contract and simultaneously sold October futures in a trading strategy known as bear spreading.
On Monday, market participants will wait for feedlots to tally the number of cattle for sale, while looking ahead to USDA’s monthly Cattle On Feed report, which will be issued on Friday Aug. 22.
CME feeder cattle ended sharply higher, fueled by fund buying and live cattle market advances.
August closed up 2.100 cents per lb. at 217.225 cents, and September ended at 215.100 cents, 2.050 cents higher.
MOST HOGS RISE AS SHORTS COVER
CME hogs settled mostly higher supported by short-covering, but slumping cash and wholesale pork prices pressured the October contract, traders said.
October ended down 0.300 cent at 94.950 cents per lb. December finished 1.300 cents higher at 89.050 cents, and February up 0.750 cent at 87.350 cents.
The afternoon’s average price of hogs in Iowa-Minnesota slid $1.03 per cwt from Thursday to $103.65, the USDA said.
Separate government data showed the afternoon’s wholesale pork price stumbled $4.39 from Thursday to $111.80 per cwt.
Packers are flush with heavy hogs after farmers aggressively moved animals to market as cash prices drifted downward, traders and analysts said.
The influx of heavyweight hogs made more pork available to grocers, they said.
Investors next week look to see whether the one-week slide in hog prices will persist, or if packers will pay up for supplies to pad inventories well ahead of the Labour Day holiday.
