By Theopolis Waters
CHICAGO, Jan 27 (Reuters) – Chicago Mercantile Exchange live cattle posted their biggest one-day percentage increase in six months on Tuesday, driven up over 2 percent by bargain hunting, traders said.
Speculative buying and short-covering helped boost nearby trading months to their 3.000-cents-per-pound price limit, which will result in an expanded limit to 4.500 cents on Wednesday.
February and April settled at 152.825 cents and 151.000 cents per lb., respectively.
Futures benefited from discounts to last week’s prices for market-ready, or cash, cattle. But thinning margins and lackluster wholesale beef demand could pressure cash returns this week.
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U.S. livestock: Cattle futures fall back ahead of cattle on feed report
Chicago live and feeder cattle futures fell back on Thursday ahead of Friday’s cattle on feed report. Hogs were mixed.
Last week, cash cattle in the U.S. Plains traded at $158 to $160 per hundredweight (cwt), feedlot sources said.
Tuesday morning’s Choice wholesale beef price sagged $1.71 per cwt from Monday to $249.70. Select slumped $2.23 per cwt to $242.56, the U.S. Department of Agriculture said.
The blizzard in the U.S. Northeast delayed deliveries of meat to buyers and will likely hurt restaurant business in the region, traders and analysts said.
Meanwhile, possible signs of progress in labour talks involving West Coast port workers encouraged futures investors. The prolonged work slowdown created congestion at those ports that significantly delayed exports of U.S. goods, including meat.
“It’s really been within the past couple of months that impact from the congestion has started to escalate, with pork more affected than beef because it has a shorter shelf life,” said U.S. Meat Export Federation CEO Phil Seng.
CME feeder cattle January contract slipped before its expiration on Thursday, while remaining months drew support from weaker corn prices and live cattle market buying.
January closed 0.875 cent lower at 210.775 cents per lb., March ended 3.850 cents higher at 203.825 cents and April finished at 205.225 cents up 4.125 cents.
HOGS SLIDE LATE
CME lean hogs settled lower on profit-taking and lower wholesale pork prices that pared early-session futures advances, traders said.
February closed 1.400 cents per lb. lower at 69.425 cents, and April down 0.600 cent to 72.050 cents.
USDA data showed the morning’s wholesale pork price had fallen $1.73 from Monday to $82.74 per cwt, with prices down for all categories except pork bellies.
Weather problems in the eastern U.S. and labour challenges on the west coast may be hurting packers’ ability to move pork, a trader said.
Tepid wholesale pork demand may continue to delay the seasonal turnaround in cash prices, he said.
Cash prices in the Midwest on Tuesday morning sold steady to 50 cents per cwt lower from Monday, regional hog dealers said.
