CHICAGO, March 16 (Reuters) – Chicago Mercantile Exchange live cattle futures finished moderately higher on Wednesday as the steep climb in wholesale beef values fueled expectations for strong cash prices by Friday, traders said.
Futures hit a 4-1/2-month peak but pared gains on profit-taking and positioning ahead of the U.S. Department of Agriculture’s monthly Cattle-On-Feed report on Friday, they added.
Analysts, on average, expect Friday’s report to show 8 percent more cattle were placed in feedlots last month than in February 2015.
April live cattle ended 0.825 cent per lb higher at 141.550, and June closed up 0.425 cent at 130.750.
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“Packers went after the pork because of the Easter seasonal. Now, they’re playing catch up after being caught short of beef and cattle,” Global Commodity Analytics President Mike Zuzolo said.
Wholesale beef demand garnered more support from the early start to spring grilling west of the Mississippi because of warm dry conditions, he said.
The morning’s wholesale choice beef price jumped $2.59 per cwt from Tuesday to $233.60. Select cuts rose $2.48 to $224.06, the U.S. Department of Agriculture said.
A rebound in packer margins to positive territory, and a decline of about 13,000 cattle for sale this week, contributed to bullish cash price sentiment.
Wednesday’s estimated average beef packer margin was a positive $29.00 per head, up from a negative $1.40 on Tuesday and a negative $40.05 a week ago, as calculated by HedgersEdge.com.
Last week, market-ready, or cash, cattle in the U.S. Plains fetched $138 per cwt, $2 higher than the week before.
April futures led advances after it punched through the 200-day moving average of 140.16, which triggered fund buying and buy stops.
CME live cattle market buying carried feeder cattle futures to a two-month high. March closed up 0.475 cent per lb to 164.450 cents.
The morning’s wholesale pork price bounce and initial live cattle market advances boosted CME lean hogs, said traders.
April closed 0.575 cent per lb higher at 71.300 cents, and May ended up 0.100 cent per lb to 79.350 cents.
Wholesale pork early Wednesday surged $2.11 per cwt from Tuesday to $77.85, mainly driven by the more than $5 spike in rib values, the USDA said.
“Runaway beef prices took pork up along with it,” a trader said.
