U.S. livestock: Short-covering boosts CME live cattle

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Thursday after short-covering and fund buying reversed the previous session’s losses, said traders.

In a trading strategy known as bull spreads, traders bought June and simultaneously sold deferred months, stirred by firmer wholesale beef values and future’s discount to expected cash prices this week.

June live cattle closed 1.85 cents/lb. higher at 107.525 cents, and above the 10-day moving average of 106.125 cents (all figures US$). August ended 0.925 cent higher at 104.3 cents.

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Packer bids for slaughter-ready, or cash, cattle in the U.S. Plains were $119-$122/cwt against up to $128 asking prices. On Wednesday, a small number of cash cattle in Nebraska brought $119-$121.

Last week’s overall cash cattle trade in the Plains was $118-$128/cwt.

Bullish futures investors were encouraged by the resumption of higher wholesale beef prices amid spring grilling and ahead of the Memorial Day holiday weekend.

Lighter weekly cattle weights suggest feedlots are actively moving animals to market on schedule, or current, to avoid them backing up amid forecasts for increased supplies ahead, they said.

“Our cattle are extremely current. So we’re holding out for steady or better prices than last week,” a Plains feedlot source said.

Technical buying and higher live cattle futures rallied CME’s feeder cattle contracts.

May closed 1.45 cents/lb. higher at 138.6 cents.

Hogs close mostly higher

Firmer cash and wholesale pork prices and short-covering landed most CME lean hogs months in bullish trading territory, traders said.

Some investors bought deferred months and sold May ahead of its expiration on Monday, they added.

CME May closed 0.45 cent/lb. lower at 65.475 cents. Most actively traded June ended up 0.75 cent at 77.325 cents. July closed 0.475 cent higher at 78.075 cents, and above the 20-day moving average of 77.825.

A few packers have enough hogs for the rest of the week, but others need hogs for next week while taking advantage of their profitable margins and improved pork demand, a trader said.

Reporting for Reuters by Theopolis Waters in Chicago.

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