By Theopolis Waters
CHICAGO, July 18 (Reuters) – Chicago Mercantile Exchange live cattle futures settled higher on Friday after choppy action, helped by their discounts to this week’s prices for cash cattle, traders said.
August live cattle finished 0.975 cent per pound higher at 151.625 cents, and October 0.625 cent higher at 154.325.
Cash cattle in Texas and Kansas sold at mostly $155 per hundredweight (cwt), down $1 from last week. Sales of $156 to $157 in Nebraska were steady to $1 higher than a week ago.
Predictions for as much as a $3 per cwt. drop in cash prices faded when packers upped bids for cattle by mid-week after being caught short of inventory.
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Profitable packer margins and wholesale beef prices still near record highs, despite Friday’s pullback, were positive cash cattle price influences.
“We usually see a seasonal turnaround for grilling after July Fourth, it just falls out of bed and it hasn’t happened,” said Commodity Information Systems analyst Bob Howard, citing unusually mild summer weather in parts of the country.
Friday afternoon’s wholesale price for choice beef fell $1.36 per cwt. from Thursday to $248.45. Select beef dropped $1.59 to $242.65, according to the U.S. Department of Agriculture.
CME feeder cattle August futures drew support from the higher live cattle market and lower corn prices, while profit-taking pressured September.
August closed up 0.050 cent per lb. to 211.650 cents, and September down 0.050 cent to 212.300.
CASH HOG PRICE WOES STIR SPREADS
CME hog nearby trading months finished lower after weaker cash prices prompted investors to sell August and simultaneously buy back months in a trading strategy known as bear spreading.
Hog weights remain heavy enough to minimize the lack of ample available animals for slaughter as a result of the Porcine Epidemic Diarrhea virus (PEDv), said Don Roose, an analyst with U.S. Commodities Inc.
Friday afternoon’s average hog price in the Iowa-Minnesota market dipped 18 cents per cwt. from Thursday to $127.65, USDA said.
Packers cut bids for slaughter-ready, or cash, hogs to improve their margins and lift wholesale pork values.
Pork packer margins for Friday were at positive $7.70 per head, compared with a positive $1.40 on Thursday and a negative $1.10 a week ago, as calculated by industry analytics firm HedgersEdge.com.
The government data showed the afternoon wholesale pork price up 47 cents per cwt. from Thursday to $137.56.
Speculation that the pig virus would further squeeze supplies beginning this fall pushed up deep-deferred CME hog contracts.
August ended 1.775 cents per lb. lower at 127.075 cents, and October at 113.550, down 0.175 cent. December closed 0.700 cent per lb higher at 103.600, and February up 0.225 to 99.275.
