CHICAGO, Ill. (Reuters) — Chicago Mercantile Exchange live cattle futures gained for the fourth day in a row on Thursday, again helped by their discounts to cash prices, traders said.
April ended up 0.075 cent per pound at 160.800 cents and June was 0.325 cent higher at 152.000 cents.
“There was too much anticipation that cash would fall apart, and it hasn’t happened,” said U.S. Commodities analyst Don Roose.
So far this week, a modest number of market-ready, or cash, cattle in Texas and Kansas fetched $162 to $163 per hundredweight, compared with $163 to $165 last week, industry sources said.
Unsold cash cattle in the southern Plains were bid at $159 versus asking prices of up to $166, they said.
Less cash spending, by cutting kills, worked wonders for packer margins and propped up wholesale beef values.
Thursday morning’s choice wholesale beef price was up 22 cents per cwt. from Wednesday at $261.02. Select cuts gained 39 cents to $251.61, the U.S. Department of Agriculture said.
The day’s beef packer margins were a positive $10.70 per head, compared with a negative $11.50 on Wednesday, according to Hedgersedge.com.
Investors sold April futures and simultaneously bought the June contract in a trading strategy known as bear spreading.
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Those spreads hoisted June beyond the 20-day moving average of 151.86 cents, which ignited modest fund buying.
Fund buying and CME live cattle advances elevated the exchange’s feeder cattle contracts.
April closed 0.575 cent per lb. higher at 215.800 cents.
CME lean hogs closed higher on short-covering and fund buying that offset some of Wednesday’s deep losses, traders said.
May closed 1.575 cents per lb. higher at 71.025 cents and June was 0.900 cent higher at 76.375 cents.
Hog futures gained in the belief that cash prices, aided by tight supplies, could methodically move up to futures’ level, said Roose.
Cash hogs in the Midwest on Thursday morning sold mostly steady to $1 per cwt. higher than on Wednesday, regional dealers said.
Packers may be cautious about spending more for supplies after upward-trending cash prices and the inability to consistently sell pork at wholesale ate into their margins.
Separate government data showed the morning’s wholesale pork price down 75 cents per lb. from Wednesday at $66.54.
Hedgersedge.com calculated Thursday’s pork packer margins at a positive $1.85 per head, compared with a positive $2.35 on Wednesday.
