By Theopolis Waters
CHICAGO, June 19 (Reuters) – Chicago Mercantile Exchange live cattle finished higher on Thursday in response to stronger-than-expected prices for cash cattle, traders said.
Cash cattle in Texas and Kansas moved at $150 per hundredweight (cwt.), up $2 from last week, according to feedlot sources.
Investors had anticipated weaker cash returns given Wednesday’s cattle trade in Nebraska of $146 per cwt., steady to $2 lower than a week earlier.
“The live cattle market continues to have tight supplies and strong beef demand and the board has reacted to that,” said Linn Group analyst John Ginzel.
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Thursday morning’s wholesale choice beef price, or cutout, gained $1.16 per cwt. from Wednesday to $240.70. Select cuts were up $1.14 to $233.19, the U.S. Department of Agriculture said.
Reduced packing plant kills and retailers buying beef for U.S. July 4 cookouts lifted the cutout, a trader said.
August live cattle led advances after traders bought that month and simultaneously sold July futures in a trading strategy known as bear spreading.
CME live cattle slipped from highs as investors took profits before Friday’s USDA monthly Cattle-On-Feed report.
The report is expected to show fewer cattle likely entered feedlots last month than a year ago.
June ended at 148.000 cents per pound, up 2.100 cents, and August 2.450 cents higher at 147.475 cents.
CME feeder cattle closed sharply higher, with some contracts up the 3-cent daily price limit, supported by fund buying and live cattle futures advances.
August finished 2.700 cents per lb. higher at 207.550, and September 3.000 cents higher at 208.575.
HOGS UP WITH CASH PRICES
CME hogs closed higher, help by cash and wholesale pork price gains, traders said.
The morning’s prices for cash, hogs in the Midwest were steady to $1 per cwt. higher, according to hog dealers.
USDA data showed Thursday morning’s wholesale pork price at $126.35 per cwt, up 18 cents from Wednesday.
Processors are buying supplies for early next week, while retailers purchase pork to feature for summer grilling, they said.
Short-covering after Wednesday’s losses and fund buying offered more market support.
Anticipation of tight supplies ahead in the wake of the deadly Porcine Epidemic Diarrhea virus boosted deferred CME hog contracts.
Despite this week’s USDA approval of a PEDv virus, U.S. veterinarians warned of further outbreaks during the fall.
“One gets the distinct idea that the way those distant months are now trading, the board believes the vaccine will not work at all,” said independent livestock futures trader Dan Norcini.
July closed up 2.625 cents at 128.050 per lb., and August 2.475 cents higher at 129.750.
