By Theopolis Waters
CHICAGO, July 11 (Reuters) – Chicago Mercantile Exchange live cattle futures on Friday closed higher after volatile action, stirred by short-covering following recent market losses pegged to fund selling and sagging cash prices, traders said.
Despite this week’s lower prices for market-ready or cash cattle, futures remained underpriced based on those returns which attracted buyers.
August live cattle finished 0.975 cent per pound higher at 149.125 cents, and October rose 0.925 cents to 151.650 cents.
August fell 3.8 percent over the week.
Cash cattle in the U.S. Plains sold at $155 to $156 per hundredweight (cwt), down $2 to $3 than last week’s all-time highs.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Packers resisted spending more for cattle to conserve their margins while awaiting the delayed seasonal increase in supplies.
Investors are watching wholesale beef prices that are expected to top out soon as hot weather deters consumers from eating heavier meals.
Friday morning’s wholesale price for choice beef dropped 88 cents per cwt from Thursday to $251.29 per cwt. Select beef reached $244.66, topping Thursday’s record, according to U.S. Department of Agriculture data.
CME feeder cattle finished weak in choppy trading on fund liquidation, but were off morning lows due to late-session short-covering.
“When you have a lot of funds in a thinly traded market, it tells me they don’t know how to get out,” said Citigroup futures specialist Sterling Smith.
Lower corn prices in reaction to Friday morning’s bearish USDA grain reports cushioned CME feeder cattle’s initial fall.
August closed down 0.225 cents per lb to 210.375 cents, and September 0.575 lower at 211.625.
Over the week, August feeders fell 3.3 percent.HOG FUTURES GAIN ON SHORT-COVERING
CME hog futures closed flat to higher on short-covering, said traders.
Deferred-months’ discounts to CME’s hog index at 130.93 cents aided market advances, they said.
Cash hog prices will be key in the coming weeks as tighter supplies due to the Porcine Epidemic Diarrhea virus clash with heavier hogs helped by cheaper corn.
USDA morning direct market hog price data was unavailable. Hog prices in the U.S. Midwest traded steady to $1.00 per cwt. lower, according to hog dealers.
CME hog August and October buying returned both contract above their respective moving average support levels.
July hogs closed unchanged at 132.800 cents per lb.
August ended up 0.725 cent to 128.675 cents, and above the 40-day moving average of 128.59 cents.
The August contract fell 2.2 percent on the week.
October on Friday closed 0.850 cent higher at 113.800 cents and over the 20-day moving average of 112.35 cents.
