By Theopolis Waters
CHICAGO, July 13 (Reuters) – Chicago Mercantile Exchange live cattle futures closed sharply higher on Wednesday after bargain hunting and short-covering snapped the market’s two-day loosing streak, traders said.
“I think some people are finally catching on to the idea that maybe sentiments that this market will continue to decline is overdone,” said Doane Advisory Services economist Dan Vaught.
August live cattle futures ended 2.550 cents per pound higher at 111.450 cents, and October closed 1.450 cents higher at 110.350 cents.
Futures’ remained undervalued compared to last week’s prices for market-ready or cash cattle, and what packers might pay for them by Friday.
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Packers have bid $116 per cwt. for cash cattle in the U.S. Plains that are priced over $120, said feedlot sources.
Last week, cash cattle traded at $119 to $120.
Current futures prices, seasonally slow wholesale beef demand and expectations of increased cattle supplies ahead could pressure cash prices.
The morning’s Choice beef price was down 31 cents per cwt. to $206.07 from Tuesday.
Select cuts were up 59 cents to $196.63, the U.S. Department of Agriculture said.
Wednesday was the third of five days in which funds in CME’s livestock markets that track the Standard & Poor’s Goldman Sachs Commodity Index periodically sold, or “rolled,” August long positions mainly into October.
Short-covering and CME live cattle market buying pulled up the exchange’s feeder cattle futures.
August feeders closed up 0.675 cent per lb. to 139.275 cents.
FIRM HOG FUTURES SETTLEMENT
Strong wholesale pork prices and CME lean hog futures’ discounts to the exchange’s hog index for July 11 at 81.97 cents underpinned contracts, said traders.
July hog futures, which will expire on Friday, closed 0.225 cent per lb. higher at 80.175 cents.
Most actively traded August finished up 0.025 cent to 79.200 cents. Wednesday morning’s wholesale pork price rose $1.09 per cwt from Tuesday to $91.29 per cwt, following more than $2 higher rib prices, said the USDA.
Hot weather in the Midwest will slow down hog weight gains, which could contribute to already seasonally tight supplies and reduce available product to retailers, a trader said.
Meanwhile, current hog numbers are sufficient enough for packers after a plant reduced operating hours to offset overall tight supplies.
Another facility resumed normal production on Tuesday after it was idled by repairs on Monday.
USDA reported Wednesday morning’s average cash hog price in Iowa-Minnesota had dropped 49 cents per cwt. from Tuesday to $76.68.
