By Theopolis Waters
CHICAGO, Nov 6 (Reuters) – Chicago Mercantile Exchange live cattle futures turned higher on Thursday after short-covering and deferred-month fund buying erased some of Wednesday’s losses, traders said.
Uneasiness about prices for market-ready or cash cattle this week pulled contracts from session tops, they said.
December closed up 0.150 cent per pound at 165.350 cents, and February 0.475 cent higher at 166.550 cents.
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Cash cattle bids appeared in Kansas at $164 per hundredweight (cwt.) in response to more than $170 asking prices in the U.S. Plains, feedlot sources said. Last week, cash cattle moved at mostly $168.
While some packers are short on inventories after buying fewer cattle last week, others have faced sluggish beef demand and severely negative margins.
Thursday morning’s Choice wholesale beef price was up 28 cents per cwt. from Wednesday at $251.52. Select was down 35 cents at $237.77, the U.S. Department of Agriculture said.
Beef packer margins for Thursday were a negative $106.05 per head, compared with a negative $115.35 on Wednesday and a negative $92.60 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
CME livestock market investors watched as positive U.S. job numbers helped strengthen the dollar, which typically does not bode well for foreign demand for U.S. goods.
Funds periodically sold or “rolled” December futures and bought back months ahead of similar moves to begin on Friday and last five days. The strategy is associated with the Standard & Poor’s Goldman Sachs Commodity Index (S&PGSCI) and is known as the S&PGSCI “roll.”
CME feeder cattle drew support from short-covering, fund buying and live cattle market advances.
November closed 0.750 cent per lb higher at 236.525 cents, and January at 230.575 cents, up 0.375 cents.
HOGS UP AS SPECS BUY
CME lean hogs rose on speculative buying and bull spreads in anticipation of a rebound in prices for slaughter-ready or cash hogs.
Bull spreads consisted of investors who simultaneously bought the December contract and sold February futures.
USDA data quoted Thursday morning’s average hog price in the western Midwest down 64 cents per cwt. in light volume from Wednesday at 85.02 cents.
Packers are savoring profitable margins and pork and chicken could benefit from high-priced beef, a trader said.
Hedgersedge.com calculated pork packer margins for Thursday were a positive $14.20 per head, compared with a positive $14.75 on Wednesday and a positive $20.25 a week earlier.
Government data showed the morning’s wholesale pork price, or cutout, up 42 cents per cwt from Wednesday at $95.47.
Bearish participants said they will not be convinced that cash prices have bottomed out until market hogs and pork cutout values consistently turn positive.
December ended up 0.525 cent per lb. at 87.650 cents, and February 0.250 cent higher at 87.000 cents.
