By Theopolis Waters
CHICAGO, June 22 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher on Monday, reversing initial weakness helped by short-covering and the morning’s wholesale beef price bounce, traders said.
June closed up 0.550 cents per pound at 152.450 cents, and August 1.225 cents higher at 151.900 cents.
Monday morning’s wholesale Choice beef price jumped $2.03 per hundredweight (cwt.) from Friday to $253.35 per cwt. Select cuts climbed $1.93 to $248.16, the U.S. Department of Agriculture said.
Investors are monitoring beef demand as retailers buy product for the U.S. July Fourth holiday.
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Cattle futures climbed again on Friday as USDA data showed a continued decline in cattle on feed. Hogs also rose.
Last week, market-ready, or cash, cattle in the U.S. Plains moved at mostly $150 per cwt., feedlot sources said.
In a trading strategy known as bear spreading, market participants sold the June contract and simultaneously bought deferred contracts.
Investors implemented the spreads amid concern about potential deliveries against the June contract that will expire on June 30.
The spreads propelled August beyond where the 10-day and 20-day moving averages converged at 151.51 cents, which ignited fund buying.
Traders await USDA’s monthly cold storage report.
After the close, USDA reported beef stocks at 468.56 million pounts, topping expectations for 459.8 million lb., and pork stocks at 653.636 million, shy of the expected 684.8 million lb.
CME feeder cattle drew support from technical buying and live cattle futures gains.
August ended up 2.350 cents per lb. at 225.775 cents.
HOGS SAG WITH CASH PRICES
Soft cash hog prices contributed to CME lean hogs’ slide to new contract lows, traders said.
July closed down 1.525 cents per lb. at 74.225 cents, and earlier sank to a contract low of 73.150 cents in electronic trading. August finished 1.450 cents lower at 72.375 cents, and posted a fresh contract low of 71.175 cents.
Cash hogs prices in Iowa-Minnesota marked their fifth straight loss based USDA data that showed Monday morning’s average cost at $75.38 per cwt., down 12 cents from Friday.
“There’s no incentive for producers to hold hogs back, and for this time of year there are a lot of pigs out there,” a Iowa hog dealer said.
Prospective futures buyers exercised caution in advance of the government’s quarterly hog report on Friday that might reveal more production than anticipated.
