LIVESTOCK-U.S. live cattle futures rally with cash, beef prices

Mon Aug 12, 2013 3:32pm EDT

Related Topics

* CME feeders slip as corn prices climb
    * Hog futures gain amid discount to cash

    By Theopolis Waters
    CHICAGO, Aug 12 (Reuters) - Chicago Mercantile Exchange live
cattle futures on Monday rallied with higher cash prices and
improved wholesale beef values, traders and analysts said.
    The U.S. Department of Agriculture on Monday morning quoted
the wholesale price, or cutout, of choice beef at $190.03 per
hundredweight (cwt), up $1.04 from Friday. Select cuts were 63
cents higher at $182.63.
    Last week, packers in Texas and Kansas paid $121 per cwt for
cattle in the cash market, up $2 from the week before.
Live-basis cattle in Nebraska fetched $123.50, roughly $3 higher
than the week before.
    "People are convinced that we've finally put in our cash and
cutout summer seasonal lows," a trader said.
    Grocers buy beef a few weeks before the Sept. 2 U.S. Labor
Day holiday, the last grilling holiday of the summer. And beef
demand typically picks up in early autumn as consumers
transition from grilling cuts to those more suited for cooking
indoors.
    Speculators bought distant live cattle contracts as corn
prices marched upward in response to USDA's bullish crop
production report Monday morning.
    Costlier corn may prompt cattle and hog producers to feed
fewer animals and nourish them to lighter weight. 
    August live cattle futures ended 1.100 cents higher
at 123.600 cents per lb. October closed up 0.525 cent to
127.400 cents. 
    CME feeder cattle prices felt pressure from the jump in corn
prices. Higher corn costs might deter feedlots from buying young
cattle.
    Feeder cattle futures slipped on corn, but still may be
overpriced based on high cash feeder cattle costs and current
deferred-month CME live cattle futures, A&A Trading Inc broker
Jim Clarkson said.
    August feeders closed at 153.500 cents, down 0.350
cent per lb, while September closed at 157.000 cents,
0.475 cent lower.
     
    CME HOGS UP ON DISCOUNT TO CASH
    August CME hogs were guided by the exchange's hog index at
101.93 cents, traders and analysts said.
    "August could expire on Wednesday close to $102 as long as
cash prices cooperate. And October will look awfully cheap
compared to the index when August goes off the board" a trader
said.
    Cash hog prices on Monday morning came in mixed.
    A major pork processor which was closed last Friday due to
seasonally tight supplies had all the hogs it needed on Monday.
Other packers are buying hogs to accommodate this week's
production.
    Traders are tracking pork demand ahead of the three-day
Labor Day holiday weekend.  
    Government data Monday morning showed the wholesale pork
price on a plant-delivered basis at $105.33 per cwt, which was
54 cents lower than on Friday.      
    Speculative traders bought deferred hog contracts in
anticipation of hog farmers possibly not adding to their herds
if corn prices continue to move higher.
    "Guys buying the back summer months on thoughts that
expansion will not occur due to the knee-jerk rally in the corn.
But that is faulty thinking ... herd expansion is a done deal,"
said independent livestock futures trader Dan Norcini.
    Spot August hogs closed at 101.400 cents per lb, or
0.875 cent higher. Most actively traded October ended at
86.200 cents, or 1.225 cent higher.
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