Watch for the Western Producer video livestock markets update Wednesday evening at Producer.com.
CHICAGO, June 10 (Reuters) – Chicago Mercantile Exchange live cattle futures peaked at five-month highs on Wednesday, sparked by short-covering and Tuesday’s steep climb in the wholesale beef price, or cutout, traders said.
Profit-taking and Wednesday morning’s modest cutout gains pulled futures from session highs, they said.
June closed up 0.725 cent per pound to 155.800 cents, and August 0.650 cents higher at 153.525 cents.
Wednesday morning’s wholesale Choice beef price rose 33 cents per hundredweight (cwt) from Tuesday to $247.53. Select cuts was up seven cents to $240.82, the U.S. Department of Agriculture (USDA) said.
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Packers cut kills which improved their margins and underpinned beef cutout prices as supermarkets bought product for Father’s Day, traders said.
The USDA estimated Wednesday’s slaughter at 91,000 head, down 20,000 from last week.
Futures’ discounts to last week’s cash prices provided more market support.
Cash bids in Kansas and Texas were at $152 per cwt. versus $158 asking prices, industry sources said. Last week, cash cattle sold at $155 to $156.
Packers will continue curbing slaughters to create a backlog of cattle, said a trader who cited 40,000 more cattle for sale this week than a week ago.
Feedlots will fight selling cattle below $158 after processors tried to pay $5 lower for them last week, he said.
Corn futures losses and CME live cattle gains pushed up the exchange’s feeder cattle contracts.
August ended 2.550 cents per lb. higher at 226.775 cents.
MOSTLY WEAK HOG FUTURES
CME lean hogs ended mostly weak, pressured by lower cash and wholesale pork values, traders said.
June, which will expire on Friday, garnered supported from its discount to CME’s hog index for June 8 at 82.30 cents.
June closed up 0.100 cent per lb. to 81.300 cents, July down 0.100 cent to 79.875 and August 0.150 cent lower at 79.250.
USDA data reported Wednesday morning’s average cash hog price in Iowa-Minnesota dropped $1.07 per cwt. from Tuesday to $77.77 on a carcass basis.
Separate government data quoted the morning’s wholesale pork price at $86.26 per cwt., down 48 cents from Tuesday.
Ample supplies weighed on cash and wholesale pork prices, a trader said.
Investors were nervous about increased hog production ahead based on Wednesday morning’s USDA monthly supply/demand report. It projected 2015 pork output at 24.5 billion lbs, up 7.1 percent from 2014 due to higher-than-expected second quarter slaughter.
“Everyone knows production will be higher, but their is uncertainty about how much,” said independent market analyst Bob Brown.
