July 12, 2017 / 7:21 PM / 4 months ago

LIVESTOCK-CME live cattle surge by 3-cent limit on cash prices

    * Feeder cattle up 4.5-cent limit
    * Lean hog contracts close firmer

    By Theopolis Waters
    CHICAGO, July 12 (Reuters) - Chicago Mercantile Exchange
live cattle contracts on Wednesday settled up the 3-cents per
pound daily price limit, driven by fund buying and futures'
discounts to stronger-than-expected cash prices, said traders.
    Funds that follow the Standard & Poor's Goldman Sachs
Commodity Index           at times sold, or "rolled", August
futures and simultaneously bought October on the third of five
days of the Goldman Roll process.
    August         and October         closed limit up at
117.875 and 117.825 cents, respectively. They finished above
their respective 20-day and 40-day moving averages of 115.889
and 116.152 cents.
    CME live cattle's trading limit will expand to 4.500 cents
on Thursday.
    On Wednesday a small number of market-ready, or cash, cattle
in Texas and Kansas brought $120 per cwt, up as much as $3 from
a week ago, said feedlot sources. They said remaining cattle
sellers are holding out for more money.
    Animals at Wednesday morning's Fed Cattle Exchange sold from
$117.25 to $118.75 per cwt versus last week's $117.75 average.
    Cash prices appear to be bottoming out with beef now being
more competitively-priced to pork, said JRS Consulting owner
Jack Salzsieder.
    The unexpected cash price bounce and seasonally slumping
wholesale beef values trimmed packer profits, although they
still remain high historically, a trader said.                  
 
    CME feeder cattle settled up the 4.500-cent price limit, led
by technical buying and live cattle futures' limit-up move. 
    August feeders         ended limit up at 151.750 cents per
pound. Feeder cattle's limit will increase to 6.750 cents on
Thursday. 
    
    FIRMER NEARBY HOG CONTRACTS
    Front-month CME lean hogs gained, helped by higher wholesale
pork values and futures' discounts to the exchange's hog index
for July 10 at 92.59 cents, said traders.
    Deferred months slipped after investors sold those contracts
and bought nearby futures with the view that cheaper feed might
encourage farmers to increase production.
    July        , which will expire on Monday, ended up 0.425
cent per pound to 92.575 cents. Most actively-traded August
        finished up 0.375 cent to 82.625 cents.
    Retailers and restaurants purchased pork to accommodate
weekend barbecues, which also comes at a time of year when
bacon-lettuce-tomato sandwiches are popular, a trader said 
citing sharply higher rib costs and record-high pork belly
prices.                    
    He said Wednesday's USDA weekly hog weight data suggests
hogs may have backed up on farms over the U.S. Fourth of July
holiday.             

 (Reporting by Theopolis Waters; editing by Diane Craft)
  

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