CHICAGO, April 26 (Reuters) – Chicago Mercantile Exchange live cattle future’s rallied again on Tuesday, led by more short-covering and sentiments that last week’s selloff was overdone, traders said.
April live cattle closed 1.250 cents per lb higher at 126.800 cents, and June ended 2.150 cents per lb higher at 118.750 cents.
“We saw short-covering because there was really no reason for the market to be as low as it was,” said Oak Investment Group president Joe Ocrant.
The morning’s mixed rather than lower beef cutout values, and packer profit’s huge jump following last week’s cash price tumble, contributed to futures buying and stirred talk of at least steady cash prices by Friday.
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Last week, market-ready, or cash, cattle in the U.S. Plains brought $125 to $128 per cwt, down from $133 to $136 the week before, said feedlot sources.
Tuesday’s average beef packer margin was estimated at positive $60.75 per head, up from a positive $6.45 on Monday and a positive $30.05 a week earlier, as calculated by HedgersEdge.com
The morning’s wholesale choice beef price was down 24 cents per cwt from Monday to $219.97. Select cuts rose $1.22 to $211.45, the U.S. Department of Agriculture said.
Buy stops, short-covering and CME live cattle futures’ upswing boosted feeder cattle contracts.
April feeder cattle, which will expire on Thursday, closed up 0.550 cent per lb to 146.575 cents. May ended 1.925 cents higher at 145.175 cents.
CME lean hogs finished lower, pressured by cash price uncertainty and futures’ premiums to the exchange’s hog index for April 22 at 68.06 cents, traders said.
Thinly traded May ended down 0.150 cent per lb to 74.775 cents, and most-active June closed 0.625 cent lower at 77.825 cents.
Regional hog dealers quoted the morning’s cash hog prices in the Midwest steady with Monday’s sales. Prices on the government’s morning direct hog market report were unquoted.
Some packers may need a few hogs for the rest of this week’s production, said dealers.
They said at least one major packing plant scheduled to be closed on Thursday, and possibly Friday, for equipment upgrades will require fewer pigs.
Meanwhile, grocers stepped up pork purchases to accommodate grilling demand and in preparation for Mother’s Day advertisements in early May, a trader said.
Tuesday morning’s wholesale pork price at $81.59 per cwt was up $1.01 cents from Monday, according to USDA data.
