By Theopolis Waters
CHICAGO, Jan 21 (Reuters) – Chicago Mercantile Exchange live cattle closed higher on Wednesday, lifted by short-covering stirred by the morning’s wholesale beef price rebound, traders said.
February live cattle closed up 0.650 cent per pound to 153.700 cents, and April 0.800 cents higher at 151.875 cents.
Wednesday morning’s Choice wholesale beef climbed 71 cents per hundredweight from Tuesday to $258.95. Select rose 73 cents to $249.56, the U.S. Department of Agriculture said.
Retailers are buying beef in small amounts to feature through the middle of February, an analyst said.
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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.
Early-week slaughter or cash cattle prices were lower, but futures remained underpriced to cash returns which encouraged buyers.
Profitable packer margins, and Wednesday’s futures run up, may cause feedlots to hold out for more money for remaining cattle.
So far, a small number of cash cattle in Nebraska sold at $159 to $160, down from mostly $162 to $164 there last week, feedlot sources said.
They said feedyards in Kansas have not responded to packer bids of $158 to $159 per cwt.
USDA will issue the monthly cold storage report on Thursday, which will include total December beef and pork inventories.
A few analysts, on average, estimated total beef stocks last month at 395.9 mln lb., and 483.6 lb. for pork.
USDA’s monthly Cattle-On-Feed report is on tap for Friday.
CME feeder cattle finished higher on short-covering, weak corn prices and live cattle futures buying.
January closed 1.225 cents per lb. higher at 215.700 cents and March at 205.300 cents, up 2.825 cents.
HOGS END MIXED
CME lean hogs traders bought February and simultaneously sold back months in a trading strategy known as bull spreads, a trader said.
Investors implemented the spreads in anticipation of cash hog prices bottoming out seasonally, partly based on the recent decline in hog weights.
Until then, current ample supplies have allowed packers to cut cash bids which has increased their margins.
Cash prices in the Midwest Wednesday morning were down as much as $1 per cwt. from Tuesday, regional hog dealers said.
Pork packer margins for Wednesday were a positive $28.35 per head, compared with a positive $22.65 on Tuesday and a positive $19.20 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
February closed up 0.575 cents per lb. to 72.350 cents, and April ended down 0.450 cents to 74.225 cents.
