By Theopolis Waters
CHICAGO, June 4 (Reuters) – Chicago Mercantile Exchange live cattle futures gained on Thursday on short-covering after wholesale beef values turned higher, traders said.
June closed up 0.725 cent per pound to 153.225 cents, and August 0.825 cent higher at 151.450 cents.
Thursday morning’s Choice wholesale beef price, cutout, rose $1.23 per hundredweight (cwt.) from Wednesday to $250.51. Select cuts climbed $2.20 to $242.00, the U.S. Department of Agriculture said.
Traders are waiting to see if the cutout can hold at current levels or push higher, said U.S. Commodities analyst Dax Wedemeyer.
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“I think that’s the uncertainty that’s keeping the support in the market,” he said.
Wholesale beef costs came down enough to stimulate demand as product becomes less available after packers cut kills to recover lost margins, traders and analyst said.
On Thursday, packers processed 6,000 fewer cattle at 110,000 head, according to USDA estimates.
Futures garnered more support from their discounts to expectations for cash prices this week, they said.
Packers have not bid on cash cattle after feedlots in the U.S. Plains asked $162 to $163 per cwt. for their animals, industry sources said. Last week, cash cattle fetched mostly $160.
Tight cattle numbers might compel a handful of processors to pay the same as last week for supplies, a trader said.
However, other packers will avoid paying more for cattle based on eroding margins, anticipation of a seasonal supply increase and overall lackluster beef sales, he said.
CME live cattle buying and short-covering boosted the exchange’s feeder cattle contracts.
August ended 0.675 cent per lb. higher at 222.575 cents.
CASH WOES SINK HOG FUTURES
CME lean hogs fell for a third straight session following weak cash prices, traders said.
June closed 1.350 cents per lb. lower at 82.200 cents, and July 1.875 cents lower at 80.600 cents.
USDA reported the morning’s average cash hog price in the western Midwest at $79.37 per cwt., 71 cents lower than Wednesday.
Processors cut cash bids after padding inventories for this week’s production, traders and analysts said.
Grocers have moved beyond booking pork for Father’s Day while preparing for U.S. July 4th Independence Day holiday features, they said.
The government reported Thursday morning’s wholesale pork price at $87.09 per cwt., up 57 cents from Wednesday.
July and August selling mounted after they dropped below their respective 100-day moving averages of 80.85 cents and 80.94 cents, which triggered fund liquidation and sell stops.
