* Short-covering rallies CME live cattle
* Feeders follow live cattle market higher
By Theopolis Waters
CHICAGO, June 11 (Reuters) – Chicago Mercantile Exchange hog futures climbed to a two-year high for a second straight day on Tuesday with seasonally tight hog supplies boosting cash prices, traders and analysts said.
Sharply higher pork cutout values contributed to futures’ string of nine consecutive winning sessions.
The U.S. Department of Agriculture’s Tuesday morning mandatory wholesale pork price data, or cutout, calculated on a plant-delivered basis, was $98.74 per hundredweight. The price was up $1.78 cents from Monday to its highest level since the dataset began in January.
Read Also
Canadian Financial Close: Loonie gives up tenth of a cent
By Glen Hallick Glacier Farm Media | MarketsFarm – The Canadian dollar eased back on Monday, positioning ahead of Wednesday’s…
USDA data showed the average hog price on Tuesday morning in the western Midwest market jumped $4.02 per hundredweight from Monday to $101.24.
Packers hiked cash hog bids while keeping pace with brisk wholesale pork demand. Supermarkets are buying fresh meat for U.S. July 4 holiday features.
“I expect cash prices to stay relatively firm until buying for July Fourth needs are met. After that I expect them to fall rather sharply,” independent livestock futures trader Dan Norcini said.
With extreme heat discouraging cooking outdoors, grilling demand typically declines as the summer wears on. Packers have already trimmed slaughter rates to counter tight supplies and recoup lost margins.
Monday and Tuesday’s combined hog slaughter was 402,000 head, down 5,000 head from last week, based on government estimates.
July hog futures led advances after spread traders bought the contract and sold spot-June before it expires on June 14.
CME June hogs closed up 1.075 cents at 100.275 cents, and July ended at 99.150 cents, or 1.250 cents higher. Both contracts peaked at 5-1/2 month highs.
SHORT-COVERING LIFTS CATTLE
CME live cattle turned higher as short-covering and speculative buying erased Monday’s losses, traders and analysts said.
“Nobody could rationalize why futures unraveled yesterday which prompted bargain hunting today,” a trader said.
Live cattle June’s discount to recent cash prices lured would-be buyers. And futures surpassed technical levels, which stirred fund buying.
June cattle closed at 120.325 cents, 1.125 cent per lb. higher, finishing nearly in line with the 20-day moving average of 120.340 cents.
August ended up 1.275 cents to 119.700 cents. It closed above the respective 10-day and 20-day moving averages of 119.615 and 119.514 cents.
Bullish traders see futures’ turnaround underpinning this week’s cash cattle prices.
Contrarians, however, point to mixed wholesale beef prices and more animals for sale this week.
There were no cash bids or asking prices reported, according to feedlot sources. A small number of cattle a week ago moved at $122 to $124 per hundredweight.
On Tuesday morning, USDA data showed the wholesale price of choice beef, or cutout, dipped 12 cents per cwt. to $203.06; select cuts rose 86 cents to $184.30.
CME feeder cattle drew support from the higher live cattle market and technical buying.
Spot August settled 1.250 cents per lb. highe
