By Theopolis Waters
CHICAGO, Aug 14 (Reuters) – Chicago Mercantile Exchange live cattle futures closed higher on Thursday on short-covering following recent heavy market losses, traders said.
August live cattle ended 1.775 cents per pound higher at 150.000, and October up 0.800 cent to 147.350 cents.
CME live cattle chopped around during most of the session, stirred by short-covering while pressured by lower returns for slaughter-ready cattle.
So far this week, cash cattle in Kansas moved at $155 per hundredweight (cwt), down $5 from last week, said feedlot sources. Cash cattle in Nebraska sold at $153 to $156 per cwt, compared to mostly $160 a week ago, they said.
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Thursday morning’s Choice wholesale beef price was at $256.66 per cwt, down 22 cents from Wednesday. Select beef dropped 84 cents to $248.71, the U.S. Department of Agriculture said.
However, live cattle futures remained bullishly undervalued compared to cash cattle prices. And speculators bought futures in the belief that the recent market selloff was overdone.
“Cash cattle prices came down, but not to the level that futures traders had expected,” said Livestock Marketing Information Center director Jim Robb.
More short-covering and speculative buying is possible on Friday as investors square positions before the weekend, traders and analysts said.
CME feeder cattle ended mixed, supported by live cattle market advances but pressured by firm corn prices and softer prices for feeder cattle in local markets.
August closed up 0.750 cent per lb. at 215.125 cents, and September ended at 213.050 cents, 0.500 cent lower.
HOGS DOWN BUT OFF LOWS
CME hogs posted losses in response to an eight-day slide in the price for market-ready hogs, trader said
The August contract, which expired today, settled down 0.375 cent per lb at 114.825 cents.
October, the new lead month, ended 2.150 cents lower at 95.250 cents. December finished at 87.750 cents, down 0.450 cent.
The morning’s average price of hogs in Iowa/Minnesota fell $2.45 per cwt. from Wednesday, to $105.00, the USDA said.
Hog farmers who held animals longer as they fed them to heavier weights are now rushing them to market in anticipation of further price reductions ahead, a trader said.
Fund selling and sell stops sent some CME hog months down their maximum 3-cents per lb. daily price limit.
Futures tried to claw back from session lows, helped by sporadic short-covering and traders searching for a market bottom.
“I think if the December contract can manage to not close limit down, it will be a sort of moral victory for people who are long the market,” independent livestock futures trader Dan Norcini said earlier during the session.
