CHICAGO, Oct 6 (Reuters) – Chicago Mercantile Exchange live cattle finished up their 3.0-cents per lb daily price limit on Tuesday, driven by short-covering and bargain hunting following the spike in wholesale beef prices, traders said.
Spot October and December finished at 125.125 and 133.225 cents, respectively. Live cattle’s trading limit will be expanded to 4.5 cents on Wednesday following Tuesday’s limit-up settlement.
Tuesday morning’s wholesale choice beef price, or cutout, jumped $1.39 per cwt from Monday to $205.36. Select cuts rose 77 cents to $199.82, the U.S. Department of Agriculture said.
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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.
Some investors attributed the cutout’s upswing to beef prices possibly bottoming out seasonally. Others said the shutdown of at least one packing plant this week for maintenance sent grocers scrambling for product.
More than one day is needed to confirm a cutout uptrend, “but this is our best shot” at seeing some semblance of increased beef demand, said U.S. Commodities analyst Don Roose.
However, he said, October live cattle has reached a point to where they might prompt more deliveries against the contract.
Market participants look for packers to ease recent pressure on cash bids given their growing profit margins, the session’s futures rally and potential beef price recovery.
Last week, market-ready, or cash, cattle fetched mostly $118 to $124 per cwt, down from $128 to $132 the week before.
Technical buying and sharply higher live cattle futures sent most CME feeder cattle up their 4.5-cents per lb price limit that will be widened to 6.750 cents on Wednesday.
October feeder cattle ended at 182.525 cents, up 4.400 cents per lb. November and January closed limit up at 178.025 and 172.800 cents.
HIGHER HOG MARKET SETTLEMENT
CME lean hogs were supported by live cattle market gains and deferred-month discounts to the exchange’s hog index for Oct. 2 at 73.38 cents, traders said.
Spot October closed up 0.600 cent per lb to 73.600 cents, and December 2 cents higher at 66.725.
Fund buying erupted after December and February plowed through their respective 200-day moving averages of 65.96 and 69.07 cents.
Fundamentally, packers have all they need for this week’s production, while supermarkets consider advertising beef after October National Pork Month, a trader said.
USDA reported Tuesday morning’s average cash hog price in the Iowa/Minnesota market at $71.72 per cwt, $1.76 lower than on Monday.
The government quoted the morning’s wholesale pork price at $87.31 per cwt, up 14 cents from Monday.
