May 8, 2018 / 10:04 PM / 6 months ago

LIVESTOCK-CME live cattle turn up on short-covering, fund buying

    CHICAGO, May 8 (Reuters) - Chicago Mercantile Exchange live
cattle        settled higher on Tuesday, helped by
short-covering and fund buying that halted the market's
two-session slide, traders said.
    In a trading strategy known as bull spreads, some investors
bought June futures and simultaneously sold deferred months in
anticipation of this week's cash prices.
    Bull spreads offset CME livestock market funds that track
the Standard & Poor's Goldman Sachs Commodity Index          
that sold, or rolled, June futures mainly into August.
    Tuesday was the second of five days for the "roll" process.
    June         live cattle closed 1.125 cents per pound higher
at 106.300 cents. August         ended up 0.375 cent at 104.475
cents.
    Market bulls look for packers to pay more for cattle this
week given their higher margins and recent robust wholesale beef
demand for spring grilling and Memorial Day barbecues. 
                  
    Bearish investors believe packers purchased enough cattle in
advance of a forecasted supply growth in the weeks ahead.
    "We look for the packer to be patient this week thinking
that by Friday, the cattle feeder will feel the pressure of
unsold fed supplies and turn into a willing seller," David Hales
said in his newsletter to clients. Fed cattle are animals in
feedlots available for sale to processors. 
    Packers in Kansas posted bids of $120 per cwt for
slaughter-ready, or cash, cattle versus $127 to $128 asking
prices. No bids or offers were reported elsewhere in the U.S.
Plains where cattle last week fetched $118 to $128.
    Investors await the sale of 2,380 animals at Wednesday's Fed
Cattle Exchange. Livestock there last week on average brought
$122.50 per cwt.
    Higher CME live cattle futures underpinned the exchange's
front-month feeder cattle contracts.
    May         closed up 0.100 cent per pound at 137.725 
cents.
      
    HIGHER HOGS SETTLEMENT
    Strong cash prices and technical buying boosted CME lean hog
futures, traders said.
    Sporadic fund rolling contributed to deferred-month hog
market gains, traders said.
    May         closed up 0.125 cent per pound at 66.200 cents.
Most actively traded June         ended 2.125 cents higher at 
76.300 cents, and July         closed up 1.825 cents at 77.725
cents.
    China has ramped up inspections of U.S. pork, importers and
industry sources said.             
    China has not been a major U.S. pork importer for several
months because of increased hog production there, said
independent livestock futures trader Dan Norcini, regarding
possible impact on subsequent U.S. pork exports.   

 (Reporting by Theopolis Waters
Editing by Leslie Adler and Phil Berlowitz
)
  
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