By Theopolis Waters
CHICAGO, Oct 6 (Reuters) – CME live cattle closed higher, supported by strong beef values and last Friday’s better-than-expected cash prices, traders said.
October closed 0.650 cent per pound higher at 163.050 cents, and December up 0.425 cent to 166.300 cents.
Monday morning’s Choice wholesale beef price, or cutout, jumped $2.13 per cwt from Friday to $240.45. Select surged $3.10 to $229.46, the USDA said.
Government data showed last Friday’s market-ready, or cash, cattle in Texas moved at $162 per cwt, up $3 from two weeks ago. Cash cattle in Kansas sold at $162 per hundredweight (cwt.), $2 higher than the week before.
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And USDA reported cash sales of $162 in Nebraska that were $3 to $5 higher than the prior week.
Packers cut slaughters and upped wholesale beef costs to get a grip on slipping margins and counter high-priced cattle, traders said.
Beef packer margins for Monday were a negative $76.90 per head, compared with a negative $69.10 on Friday and a negative $91.20 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
The possibility that processors might spend more for cattle again this week stirred bull spreads, which consisted of traders who bought the October contract and sold December.
CME feeder cattle contracts settled lower, weighed on by profit-taking and higher corn prices.
October closed down 0.875 cent per lb. to 240.000 cents, and November 0.700 cent lower at 240.275 cents.
HOGS CLEAR TECHNICAL HURDLE
Chicago Mercantile Exchange lean hogs futures closed sharply higher on Monday, supported by short-covering and fund buying after contracts surpassed key technical resistance levels, traders said.
October hogs closed 1.575 cents per lb. higher at 107.175 cents. December finished at 95.875 cents, 2.850 cents higher and above the 100-day moving average of 95.61 cents.
Nearby trading months were under priced based on CME’s hog index at 109.68 cents, which encouraged buyers despite soft cash and wholesale pork prices.
Monday morning’s average slaughter-ready, or cash, hog price in Iowa-Minnesota was down $1.43 per cwt. from Friday to $106.20, according to the U.S. Department of Agriculture.
Separate USDA data showed the morning’s wholesale pork price slipped 15 cents per cwt from Friday to $123.60.
The onset of a seasonal supply increase pressured cash prices, while grocers wrap up the bulk of pork purchases for October National Pork Month, traders and analysts said.
In a trading strategy known as bear spreading, investors simultaneously sold the October contract, which will expire on Oct. 14, and bought December.
Speculative buyers bought deferred hog contracts as Chicago Board of Trade corn reached a two-week high. Expensive feed may discourage hog farmers from expanding their herds.
