March 9, 2018 / 9:52 PM / a year ago

LIVESTOCK-CME live cattle futures snap back on bargain hunting

CHICAGO, March 9 (Reuters) - Chicago Mercantile Exchange live cattle closed higher on Friday, after short-covering and bargain buying pulled contracts up from Thursday’s seven-week low, said traders.

Bullish investors were further drawn to futures’ price value compared to this week’s prices for slaughter-ready, or cash, cattle.

April live cattle closed 1.350 cents per pound higher at 123.125 cents, and above the 10-day moving average of 123.108 cents. June finished 1.025 cents higher at 114.300 cents.

This week the bulk of cash cattle in the U.S. Plains traded from $126 to $127 per cwt versus last week’s mostly $126 sales, said feedlot sources.

Rising packer profits and robust beef demand encouraged packers to pay more for supplies, said analysts and traders.

However, they added that expectations of increased supplies limited CME live cattle market advances.

“Futures were discounted to the cash market. But the packer popped his head up, bought what he needed and stepped away,” said CHS Hedging analyst Steve Wagner.

The bright spot for the cattle sector is how well wholesale beef demand has held up in the midst of the Lenten season - largely due to solid U.S. beef exports, said Wagner.

April live cattle led gainers stirred by bull spreads which consisted of some traders who bought April and simultaneously sold deferred months.

However, bull spreads offset funds in CME’s livestock markets that at times sold, or “rolled,” April long positions into the June contract in accordance with the Standard & Poor’s Goldman Sachs Commodity Index.

Friday was the third of five sessions for the roll process.

Short-covering and live cattle futures’ rebound lifted CME feeder cattle contracts.

March feeders ended 0.775 cent per pound higher at 142.525 cents.


Hog futures at the CME were weakened by packers paying less for hogs following the recent slump in wholesale pork prices, said traders.

Wholesale pork values will likely recover when retailers purchase more hams for Easter and as the spring grilling season approaches, said Wagner.

Market participants said trade war fears, and how that might impact U.S. pork exports, kept a lid on deferred CME hog contracts.

The United States exports roughly a quarter of the pork it produces, said industry experts.

April hogs closed down 0.225 cent per pound at 67.850 cents, and May finished 0.350 cent lower at 72.000 cents. (Reporting by Theopolis Waters Editing by James Dalgleish)

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