CHICAGO, Sept 8 (Reuters) – Chicago Mercantile Exchange live cattle nearby trading months settled up their 3-cent per lb daily price limit on Tuesday, partly fueled by short-covering and futures’ discounts to last week’s cash prices, traders said.
October and December live cattle ended at 143.475 and 145.775 cents, respectively. CME’s live cattle trading limit will be expanded to 4.5 cents on Wednesday following Tuesday’s limit-up settlement.
“I think we reached that point to where the discount was just too big for potentially tighter supplies in the fourth quarter,” said U.S. Commodities analyst Don Roose.
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Last week, market-ready, or cash, cattle in the U.S. Plains fetched $142 to $143.50 per cwt, down as much as $5 from the week before, feedlot sources said.
Packers needed fewer cattle before Labor Day, but they are now buying for the first full work week after the holiday, a trader said.
Wholesale beef prices are expected to grind lower after Labor Day signaled the end of the traditional summer grilling season, he said.
The morning’s wholesale choice beef price dropped 87 cents to $239.20 per cwt from Friday. Select cuts rose 53 cents to $228.92, the U.S. Department of Agriculture said.
U.S. stock’s more than 2 percent rebound sparked fund buying across several commodities, including CME live cattle.
Furthermore, funds trading CME’s livestock markets shifted October long positions further back in a procedure known as the “roll” by followers of the Standard & Poor’s Goldman Sachs Commodity Index (SP&GSCI).
Tuesday was the first of five days for the SP&GSCI roll process.
Live cattle futures buying boosted CME feeder cattle contracts, with September ending 2.950 cents higher at 204.300.
MAINLY FIRM HOG FUTURES
CME October hogs closed weak as plentiful supplies pressured cash prices, while speculative buying and the roll by funds underpinned remaining trading months, traders said.
Spot October closed down 0.375 cent per lb to 68.775 cents, December up 0.250 cent to 63.600 and February 0.400 cent higher at 68.200.
Tuesday morning’s Midwest cash hogs traded steady to $1 per cwt lower than last Friday, regional hog dealers said.
The three-day holiday weekend may have backed hogs up on farms, but packers want to capitalize on their profitable margins and solid pork demand by processing as many hogs as possible, the dealers said.
Tuesday morning’s wholesale pork price at $85.67 per cwt was up 36 cents from Friday, led by the $4.29 rise in costs for pork bellies.
