By Theopolis Waters
CHICAGO, Aug 6 (Reuters) – Chicago Mercantile Exchange live cattle futures on Wednesday closed firm, supported by their discounts to last week’s cash cattle market, traders said.
CME hogs also posted gains, helped by short-covering after brushing aside lower cash and wholesale prices, they said.
The live cattle market chopped around throughout the session as investors wait for this week’s cash market to establish.
Ebbing beef cutout values could pressure cattle futures.
Last week, cash cattle in the U.S. Plains traded at mostly $162 to $164 per hundredweight (cwt).
Wednesday afternoon’s choice wholesale beef price, or cutout, dropped $1.30 per pound from Tuesday to $261.97. Select beef sagged 98 cents to $255.77, the U.S. Department of Agriculture said.
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Futures earlier drifted lower because the wholesale product market is struggling and packers will resist bidding up for cattle, said Linn Group analyst John Ginzel.
Packers cut slaughter to counter generally tight cattle supplies. They are also drawing from animals contracted against the futures market to avoid spending more for cattle.
From Monday to Wednesday, packers processed 340,000 head, down 20,000 from last year, according to USDA.
August live cattle closed up 0.100 cent per lb. to 158.550, above the 10-day moving average of 158.36 cents. October 0.300 cent higher at 155.950 cents, and above the 20-day moving average of 155.63 cents.
CME feeder cattle finished narrowly mixed, supported by their discounts to the exchanges feeder index at 124.56 cents, but pressured by higher corn prices.
August finished up 0.075 cent per lb. to 221.325. September closed unchanged at 220.725 cents. October ended down 0.075 cent to 219.975 cents.
HOGS FIND SUPPORT
Short-covering and bargain hunting landed CME hogs in positive territory, in spite of sufficient numbers of heavy-weight hogs that pressured prices for market hogs and prices for pork at wholesale.
The afternoon’s average price of hogs in Iowa/Minnesota dropped 56 cents per cwt. from Tuesday, to $116.15, the USDA said.
Separate government data showed the afternoon’s wholesale pork price at $126.31 per cwt., $1.65 lower than Tuesday.
Cooler temperatures are keeping hogs from losing as much weight as they would normally during hot weather, said Ginzel. Heavy hog weights lessened the impact of lost production from the deadly pig virus, he said.
Speculators bought deferred hog contracts with the view that the pig virus will led to fewer hogs beginning this fall.
August closed up 0.550 cent per lb. to 116.400 cents, and October ended 0.525 cent higher at 102.200 cents.
