CHICAGO, Feb 16 (Reuters) – Chicago Mercantile Exchange live cattle futures settled up by their 3-cents-per-lb daily price limit on Tuesday, driven by short-covering and fund buying, traders said.
February and April ended at 132.950 cents and 132.125 cents per lb, respectively. Live cattle’s trading limit will be expanded to 4.5 cents on Wednesday.
“There was no rationale for cattle to be limit up today, other than the involvement of funds in huge numbers,” said Oak Investment Group President Joe Ocrant.
CME live cattle drew more support from Tuesday’s $131-per-cwt bids for market-ready, or cash, cattle in Texas, said traders and analysts. Last week, cash cattle in the U.S. Plains brought $128 to $134.
Read Also
Alberta Crop Report: Rains in the south, dryness in the north
Rain fell onto the southern half of Alberta last week, while hot and dry conditions persisted in the northern half, according to the province’s crop report released on July 18.
Some believe that packers posting cash bids earlier in the week than usual suggests they may be short on supplies.
Others are skeptical given negative packer margins, lackluster wholesale beef demand and possibly more cattle coming to market in the weeks ahead.
The morning’s wholesale choice beef price dipped 13 cents per cwt from Monday to $215.16. Select cuts fell 79 cents to 211.91, the U.S. Department of Agriculture said.
Beef packer margins for Tuesday averaged a negative $37.70 per head, up from a negative $46.35 on Monday and down from a negative $33.95 a week ago, as calculated by HedgersEdge.com.
The U.S. stock market rally contributed to buying across various commodities, including CME’s live cattle market, said analysts and traders.
Firm cash feeder cattle prices, and live cattle future’s limit-up move, drove up CME feeder cattle contracts. March closed 4.475 cents per lb higher at 154.500.
Weak cash and wholesale pork values pressured CME lean hogs, traders said.
April closed down 0.225 cent at 70.150 cents, and May finished 0.325 cent lower at 75.950 cents.
The morning’s wholesale pork price was 76 cents per cwt lower than on Monday at $75.91, the USDA said.
Tuesday morning’s average cash hog price in Iowa/Minnesota was 43 cents lower than on Monday in light volume at $63.62.
More hogs are available after packing plants returned to normal operations following last week’s weather-related disruptions in the Midwest, said traders.
They said several days of moderating temperatures could cause hogs to grow faster, putting more of them in the hands of packers sooner while increasing pork tonnage.
Packers on Tuesday processed 439,000 hogs, 17,000 more than a week ago.
