By Theopolis Waters
CHICAGO, July 3 (Reuters) – Chicago Mercantile Exchange live cattle futures gained modestly before the U.S. July 4th Independence Day holiday supported by higher wholesale beef prices, analysts and traders said.
CME livestock markets closed at noon CDT on Wednesday in advance of the holiday. Markets will reopen on Friday at 9:05 a.m. CDT.
The U.S. Department of Agriculture on Wednesday morning quoted the wholesale price of choice beef at $198.08 per hundredweight, up 98 cents from Tuesday. Select cuts jumped $2.01 to $188.63.
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Supermarkets booked beef for post-holiday grilling demand, a trader said. He said select cuts may have surged after some packers cleared product that had recently backed up in their coolers.
Cash cattle in Texas and Kansas traded at $119 per cwt., down $1 from last week, feedlot sources said.
Cash sales today suggests there is truth to the belief that fed supplies are increasing not peaking, said Hales Trading Co president David Hales.
Funds sold August cattle and bought deferred months. They moved long positions further out prior to similar moves next week by followers of the Goldman Sachs Commodity Index.
Funds that follow the index will shift their spot-month long positions mainly into October. That shifting will be for five days starting July 8.
CME live cattle August finished at 121.950 cents, up 0.050 cent and October closed at 126.225 cents, or up 0.300 cent.
CME feeder cattle settled narrowly mixed. Firm live cattle futures underpinned August feeder cattle.
Spread traders sold deferred feeder cattle months and bought August futures.
August CME feeder cattle closed at 150.950 cents, or up 0.050 cent per pound. September finished down 0.025 cent to 153.300 cents.
HOGS GAIN ON SHORT-COVERING
CME hogs closed higher on short-covering and fund buying despite negative market fundamentals, traders and analysts said.
USDA’s Wednesday morning mandatory wholesale pork price, or cutout, was $106.20 per cwt., slumping another $4.75 per hundredweight (cwt) from Tuesday.
Wednesday’s pork cutout was mainly dragged down by frozen pork bellies that shed more then $36.00 over the past three days. Pork bellies are processed into bacon.
“Hogs could start coming under some serious selling pressure with the cutout finally showing signs of having cut off demand for pork with these very high prices, especially for bacon,” said independent livestock futures trader Dan Norcini.
End-users switched from frozen to fresh bellies that became more available after hog numbers began building seasonally, another trader said.
From Monday to Wednesday packers processed 1.270 million hogs, 63,000 more than a week ago, according to the U.S. Department of Agriculture.
The average hog price on Wednesday morning in the most-watched Iowa/Minnesota market was 49 cents per cwt. lower from Tuesday to $99.42.
Packers lowered cash hog bids amid ample supplies. And packing plants will close for at least one day during the July 4th holiday.
CME July hogs settled 0.625 cent per lb. higher at 101.625 cents, and August closed up 0.225 cent to 96.850 cents.
