By Theopolis Waters
CHICAGO, June 8 (Reuters) – Chicago Mercantile Exchange live cattle finished higher on Monday, buoyed by speculation that cash and wholesale beef prices may bottom out soon, traders said.
June closed up 0.650 cent per pound to 153.475 cents, and August 1.025 cent higher at 151.600 cents.
Monday morning’s wholesale Choice beef price, or cutout, dipped 9 cents per hundredweight (cwt.) from Friday to $244.56. Select cuts fell $1.58 to $235.99, the U.S. Department of Agriculture said.
Last week, a small number of market-ready, or cash, cattle in Kansas and Texas sold at $155 per cwt., down $5 from the previous week, according to USDA.
Processors reduced plant hours to shore up their sagging margins and improve cutout values, traders and analysts said.
However, with nearly 40,000 more cattle expected for sale this week, near-term cash prices increases will be a challenge, they said.
Beef packer margins for Monday sank to their lowest level of the year at a negative $102.10 per head, well below a negative $80.70 for Jan. 7, as calculated by HedgersEdge.com.
In a trading strategy known as bear spreading, traders bought August and simultaneously sold June in advance of its expiration on June 30.
The spreads lifted August beyond its respective 20-day and 10-day moving averages of 150.92 cents and 151.46 cents, igniting fund buying.
Technical buying and CME live cattle market gains drove up the exchange’s feeder cattle contracts.
August ended 0.950 cent per lb. higher at 222.850 cents.
HOGS DIP AHEAD OF JUNE EXPIRATION
CME lean hogs closed weaker, partly on June selling before it expires on Friday, traders said.
Near-term cash and wholesale pork price unease pressured nearby contracts, they said.
June closed down 0.125 cent per lb. to 81.550 cents, July 0.150 cent lower at 80.975 cents.
Cash hogs in the Midwest on Monday morning sold steady to down 50 cents per cwt. from Friday, regional hog dealers said.
The government reported the morning’s wholesale pork price at $85.65 per cwt., up nine cents from Friday.
“You’re seeing some firmness in the pork market, which is not unusual for this time of year,” said David Maloni, chief analyst with the American Restaurant Association.
While packers have a enough hogs into Wednesday, others are booking supplies for the rest of the week, a trader said.