By Theopolis Waters
CHICAGO, Feb 25 (Reuters) – The lead Chicago Mercantile Exchange live cattle contract hit a new high on Tuesday in anticipation of steady to firm cash prices pegged to improved wholesale beef values, traders said.
Tuesday morning’s wholesale choice beef price rose 45 cents per hundredweight (cwt) from Monday to $216.27. Select cuts climbed $1.14 to $213.81, according to U.S. Department of Agriculture data.
Spotty cash cattle bids surfaced in Kansas at $144 per cwt with no response from sellers, feedlot sources said.
Last week, cash cattle in Texas and Kansas moved from $144 to $145 per cwt, according to sources at feedlots. They said cash cattle in Nebraska averaged $146.75 a week ago.
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Traders said packers may have revealed how badly they need cattle by tabling bids on Tuesday rather than later in the week.
“We’ve really not had an established spot cattle market for about three weeks of any magnitude.” said Linn Group analyst John Ginzel.
Some processors reduced slaughter rates to try to improve their poor margins and drive up wholesale beef costs, traders and analysts said.
Fund buying developed after the April contract moved above the 10-day moving average of 141.643 cents.
February live cattle closed up 1.300 cent per pound at 146.450 cents, and peaked at a fresh contract high of 146.575 cents in electronic trading.
April ended 1.175 cents higher at 142.400 cents.
CME live cattle gains pulled up feeder cattle futures.
March ended 0.875 cent per lb higher at 171.075 cents, and April finished at 172.525 cents, 0.900 cent higher.
HOGS HIT NEW HIGHS
Strong cash prices led CME hog futures to fresh contract highs, traders said.
They said some packers actively bought hogs while taking advantage of their profitable margins.
Processors in the western Midwest hiked cash bids to coax animals out of tightly closed swine buildings to keep out bitterly cold temperatures.
The morning’s average hog price in the eastern Midwest direct market rose $1.26 per cwt. to $90.26, based on USDA data.
Early Tuesday, cash prices in the Midwest market traded steady to $1 per cwt. higher, according to hog dealers.
Pork packer margins for Tuesday were estimated at a positive $6.65 per head, compared with a positive $4.05 per head on Monday and a positive $7.70 a week ago, as calculated by HedgersEdge.com.
Summer hog contracts again set new highs on expectations of reduced supplies during that period as the Porcine Epidemic Diarrhea virus, which is fatal to baby pigs, spread on U.S. and Canadian hog farms.
“The sharp jars in piglet import reductions from Canada is caused by something more than economics. I’ve made the assumption that is was due to PEDv,” said Ginzel.
April hogs settled at 100.575 cents per lb., up 1.325 cents, after posting a new contract high of 100.725 cents.
June finished at 108.950 cents, up 0.825 cent. It hit a fresh contract high of 109.050 cents.
