CHICAGO, March 15 (Reuters) – Chicago Mercantile Exchange live cattle contracts closed higher on Tuesday, driven by a recent surge in wholesale beef prices that stirred optimism for cash prices later this week, traders said.
April futures ended 1.425 cents per lb higher at 140.725. June closed up 1.500 cents per lb at 130.325 after peaking at a four-month high.
The morning’s wholesale choice beef price leaped $3.45 per cwt from Monday to $230.92. Select cuts spiked $4.63 to $222.12, the U.S. Department of Agriculture said.
The onset of warmer weather could usher in early spring grilling, especially in the south and southeastern regions of the country, a trader said.
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“With beef up like it is and the board on fire, I would expect the packer to have to pay up again for cattle,” said Oak Investment Group president Joe Ocrant.
Packers last week bought market-ready, or cash cattle, at $138 per cwt, up $2 from the previous week.
The run up in beef prices, fewer cattle for sale this week and much-improved packer margins point to higher cash returns for cattle sellers.
Tuesday’s estimated average beef packer margin was a negative $1.40 per head, up from a negative $4.30 on Monday and a negative $33.20 a week ago, as calculated by HedgersEdge.com.
CME live cattle market buying, and as much as $6 per cwt higher cash feeder cattle prices, fueled feeder cattle futures buying. March closed up 1.925 cents per lb to 163.975 cents.
CME April lean hog future’s premium to the exchange’s hog index for March 11 at 66.75 cents pressured that contract, said traders.
They said buying in CME’s cattle markets, and the morning’s cash price uptick, propped up the exchange’s other hog trading months.
April closed down 0.050 cent per lb at 70.725 cents. May ended 0.350 cent per lb higher at 79.250 cents and June up 0.275 cent at 83.300 cents.
Tuesday morning’s average cash hog price in Iowa/Minnesota rose 43 cents per cwt from Monday to $64.17, the USDA said.
“Packers want to hold on to those good margins by making sure more pigs pass through their plants,” an Indiana hog dealer said.
HedgersEdge estimated Tuesday’s average pork packer margin at $22.45 per head, up from $22.10 on Monday and down from $22.65 a week ago.
