By Theopolis Waters
CHICAGO, Dec 9 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher on Tuesday on short-covering, ending five straight losing sessions.
The market had been under pressure by bearish fundamentals, namely weaker cash cattle and wholesale beef prices, traders said.
December live cattle closed 0.950 cent per pound higher at 162.400 cents, and February was at 163.050 cents, up 1.175 cents.
Investors who had recently been short the market pocketed profits in preparation for coming Christmas holiday vacations, a trader said.
Today’s rally might be short-lived unless thee is a turnaround in fundamentals, he said.
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Packers lowered bids for market-ready, or cash, cattle to recover lost margins, traders and analysts said.
Cash cattle bids in the U.S. Plains were at $162 to $164 per hundredweight (cwt.) versus up to $170 asking prices, feedlot sources said. Last week, most cash cattle moved at $166 to $168.
Tuesday morning’s Choice wholesale beef price slipped 33 cents per cwt. from Monday to $251.65. Select rose $1.73 to $237.09, the U.S. Department of Agriculture said.
Investors were watching December and February futures 100-day moving averages of 161.62 cents and 161.91 cents, respectively, that are major levels of support.
CME’s December feeder contracts drew support from live cattle market advances.
Higher corn costs and mostly steady to $2 per cwt. lower prices for feeder cattle in local markets weighed on remaining futures contracts.
January ended 0.900 cent per lb. higher at 232.775 cents, March closed at 227.350 cents, down 0.875 cent, and April was 0.700 cent lower at 227.225 cents.
MOSTLY WEAK HOGS
CME December futures, which will expire on Dec. 12, attracted buyers because it remained underpriced to the exchange’s hog index for Dec. 5 at 88.30 cents.
Deferred hog contracts settled moderately lower on tepid wholesale pork demand and in anticipation of softer prices for slaughter-ready, or cash, hogs, traders said.
Early Tuesday, slaughter hogs in the Midwest generally sold steady to 50 cents per cwt. lower, said regional hog dealers.
Some packers have inventory needs met through next week while a few others are buying hogs to fill in this week’s production, they said.
Short-covering and investors probing for a market bottom at times landed contracts in positive territory.
December closed up 0.375 cent per lb. to 86.950 cents, February was 0.525 cent lower at 84.600 cents, and April was at 86.225 cents, down 0.125 cent.
