* Feeder cattle hits 7-month top
* Lean hog contracts turn lower
By Theopolis Waters
CHICAGO, April 26 Chicago Mercantile Exchange
live cattle on Wednesday reached its highest level in a
year, ignited by short-covering and futures' discounts to
initial cash prices, traders said.
They said bargain buying briefly sent some deferred live
cattle months to fresh highs and up their 3.000-cents per pound
daily price limit.
April live cattle , which expires on Friday, closed
2.200 cents per pound higher at 132.025 cents. June
ended 2.700 cents higher at 118.525 cents and hit a new high of
Animals at Wednesday morning's Fed Cattle Exchange (FCE), on
average, brought as much as $131.68 per cwt - up from last
week's $128.62 average.
Investors await packer bids and offers from sellers in the
U.S. Plains where cattle last week brought $130 to $133 per cwt.
"It's just a massive basis correction," said Archer
Financial Services broker Dennis Smith, referring to an
adjustment in the "basis" or difference between futures prices
and the cash market.
"The board (futures) is feeling too cheap. There's just too
big of a discount clear across the board," said Smith.
Packers seem willing to spend more for cattle given tight
supplies, a trader said. Grocers and restaurants are gearing up
for Mother's Day meal promotions, which should help wholesale
beef values, he said.
Wednesday morning's average wholesale beef price was up 42
cents per cwt to $219.43 from Tuesday. Select cuts slipped 24
cents to $206.03, the U.S. Department of Agriculture said.
CME feeder cattle surged to a seven-month high, and
some back months spiked to their 4.500-cents price limit, on
active live cattle market buying.
Lower corn prices, which typically reduces the cost of
feeding cattle, contributed to feeder cattle futures' buying.
April feeder cattle , set to expire on Thursday,
ended 1.125 cents per pound higher at 139.850 cents, and made a
new high of 139.950 cents.
LOWER HOG SETTLEMENT
CME lean hogs gave back some of Tuesday's gains, following a
wave of technical selling, said traders.
They said softer wholesale pork values, and uncertainty
whether cash prices have bottomed out seasonally, further
May closed 0.550 cent per pound lower at 64.675
cents. Most-actively traded June ended 1.075 cents lower
at 70.750 cents.
Plentiful hog supplies, at lower prices, enhanced packer
profits, a trader said. But that could change when supplies
begin to tighten as they typically do this time of year, he
(Reporting by Theopolis Waters; Editing by Bill Trott)