CHICAGO, Dec 12 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher on Monday, partly in anticipation of bone-chilling temperatures in the U.S. Plains and Midwest by week’s end, said traders.
Extreme cold typically slows down weight gain in cattle, making them less available to packers. Also grocers tend to stock up on meat in advance to avoid potential supply shortages.
There is nothing new fundamentally since Friday that has changed with respect to the market, said Archer Financial Services broker Dennis Smith. “So they (futures) must be getting geared up for the weather.”
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Fund buying developed after contracts surpassed technical resistance levels, which contributed to Monday’s cattle market rally.
Bullish traders are encouraged that future’s upswing, improved packer margins and the morning’s wholesale beef price rebound may support cash prices this week.
Still, bearish investors believe processors will again spend less for supplies by reducing slaughters, which could enhance their margins and drive up beef cutout values.
Last week, slaughter-ready, or cash cattle in the U.S. Plains brought $109 to $112 per cwt, down from mostly $114 to $115 last week.
December live cattle closed 1.625 cents per pound higher at 110.350 cents, and above the 10-day moving average of 109.373 cents. February settled up 2.425 cents at 112.950 cents, above the 200-day moving average of 111.749 cents.
Strong cash feeder cattle prices and live cattle future’s turnaround boosted CME’s feeder cattle contracts. January feeders closed 2.600 cents per pound higher at 128.550 cents.
CME lean hogs rose for a sixth-consecutive session led by higher cash and wholesale pork prices in advance of snow and much-colder weather heading into the weekend, said traders.
Heavy snow could snarl transportation of livestock to packing plants. And farmers typically keep doors to swine buildings closed in cold weather to retain heat.
“We’ve got snow and cold coming by the end of week. When the dust settles, they’re (packers) are going to have to show more money to keep pigs moving,” a Midwest hog merchant said.
Monday morning’s cash hog prices in Iowa/Minnesota averaged $52.44 per cwt, up 92 cents from Friday, the USDA said.
Separate government data on Monday morning showed the average wholesale pork price jumped 91 cents per cwt from Friday to $76.72.
December hogs closed 0.650 cent per pound higher at 57.375 cents. Most actively traded February ended 0.625 cent per pound higher at 62.175 cents.
