By Theopolis Waters
CHICAGO, May 27 (Reuters) – Chicago Mercantile Exchange live cattle closed higher on Wednesday after initial selling, helped by short-covering and futures’ discounts to last week’s cash prices, traders said.
June closed 0.675 cent per pound higher at 152.475 cents, and August ended up 0.800 cent at 151.425 cents.
Last week, most market-ready, or cash, cattle in the U.S. Plains sold at $159 to $161 per hundredweight (cwt), feedlot sources said.
Some packers need cattle for the first full week of kills after Monday’s Memorial Day holiday, but others are thought to have enough inventory thanks to a seasonal supply increase, traders said.
Processors are cautious about spending more for cattle ahead of beef demand that tends to taper off in June, they said.
Wednesday morning’s Choice wholesale beef price dipped 31 cents per cwt. from Tuesday to $260.76. Select cuts rose 90 cents to $250.10, the USDA said.
June futures gained more ground on technical buying after surpassing the 10-day moving average of 152.17 cents.
Weaker corn futures and CME live cattle market earlier sent the exchange’s feeder cattle contracts to 4 1/2-month highs.
August ended up 1.825 cents at 221.425 cents, and September was 1.650 cents higher at 220.175 cents.
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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.
CME lean hogs held some of their earlier gains fueled by technical buying and Tuesday’s strong cash and wholesale pork values, traders said.
But, they said, Wednesday’s softer market fundamentals pulled contracts from session tops.
June closed up 0.600 cent per lb. at 83.775 cents, and July 0.525 cent higher at 83.325 cents.
Wednesday morning’s average cash hog price in Iowa/Minnesota slumped $1.79 per cwt. in light volume from Tuesday to $77.43, the USDA said.
Separate government data quoted the morning’s wholesale pork price at $85.98 per cwt, down 69 cents from Tuesday.
Several processors have enough hogs for the week, but a few others are having difficulty finding light-weight animals, Midwest hog dealers said.
Investors are tracking wholesale pork sales and packer margins to gauge packer intentions for Saturday’s slaughter to make up for Memorial Day holiday plant shutdowns.
“If packers can find the animals they need, and their margins hold together, they could put up a big Saturday kill,” an Indiana hog dealer said.
Wednesday’s pork packer margins were a positive $11.05 per head, compared with a positive $8.75 on Tuesday and a positive $3 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
