By Theopolis Waters
CHICAGO, March 4 (Reuters) – Chicago Mercantile Exchange live cattle futures posted steep gains Wednesday on fund buying and cash price optimism that wiped out Tuesday’s losses, traders said.
April closed up the 3.000-cent per lb price limit at 154.050 cents, and June ended 2.650 cents higher at 146.325 cents.
CME live cattle’s trading limit will be expanded to 4.500 cents on Thursday following April’s 3.000-cent limit settlement.
Fewer cattle for sale and increased packer margins may convince packers to spend steady or better money for market-ready or cash cattle this week.
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On Wednesday, cash bids of $156 to $157 per hundredweight (cwt) surfaced in the southern Plains against $162 asking prices, feedlot sources said. Last week, cash cattle sold at mostly $158 to $160.
Futures’ discounts to last week’s cash prices, and what packers may pay for supplies this week, attracted speculative buyers.
CME live cattle climbed after April and June surpassed their respective 40-day moving averages of 152.44 and 145.24 cents, which ignited fund buying.
The lack of market liquidity amplified the day’s rally because there was no one to sell when buying started, said Hales Cattle Letter author David Hales.
CME feeder cattle closed up the 4.500-cents per lb price limit, fueled by technical buying and live cattle futures’ rally. The trading limit for feeder cattle will be increased to 6.750 cents on Thursday.
March closed at 207.225 cents per lb.
LEAN HOGS CLIMB
CME lean hogs surged more than 4 percent on short-covering and the morning’s wholesale pork price rebound that reversed futures’ 3-percent plunge on Tuesday, traders said.
April hog futures ended up 2.400 cents per lb to 68.000 cents, and May 1.100 cents higher at 78.625 cents.
Wholesale pork prices jumped $1.04 to $70.05 per cwt on Wednesday morning from Tuesday, supported mostly by a $3.85 rise for pork bellies, USDA said.
Processors lowered cash bids and hiked the price of pork at wholesale to preserve their modest margins, an analyst said.
Government data showed the average cash hog price in Iowa/Minnesota Wednesday morning had fallen $1.31 per cwt from Tuesday to $64.25.
The day’s pork packer margins were at a positive $1.35 per head, compared with a positive $3.25 on Tuesday and a positive $8.45 per head a week ago, as calculated by HedgersEdge.com.
