US cattle rise on fund buying, cash price seen up

By Jerry Bieszk

CHICAGO, April 30 (Reuters) - U.S. live cattle futures rose on Wednesday amid buying by funds and support by expectations for prices in the cash market to rise this week.

The June contract rose to an eight-week high, while April, which expired on Wednesday, was supported by the stopping of deliveries against the contract.

"It's just fund buying," said Jason Mylett, livestock analyst with MF Global research. "Cash is going to be steady, maybe $1 better on the week."

June live cattle 2LCM8 closed up 0.700 cent at 93.475 cents per lb and August 2LCQ8 was up 0.625 at 98.975. April 2LCJ8 expired at noon CDT (1700 GMT) at 91.650, off 0.525 cent on the day amid last minute liquidation.

Deliveries against the April contract were demanded and that, combined with higher beef prices and forecasts for higher cash cattle prices, fueled early gains.

Cash cattle were forecast to trade $1 higher this week at about $93 per cwt. Cash cattle sold at $92 per cwt in southern Plains last week, up $2, and cattle in Nebraska was up $3 to $4 at $150 on a carcass basis.

USDA early on Wednesday's put choice beef up 15 cents at $155.41 per cwt, the highest since May 25, 2007. Select was up 15 cents at $152.84 per cwt.

But Mylett and others continued to cite concerns that cash markets will be topping soon. Cash prices may be firm this week, but prices are seen slipping seasonally beginning in May and continuing into June.

"Futures still have too much premium. It (market) should top out in the next 5 to 10 trading days and I think you can sell strength here," Mylett said.

Higher live cattle futures and higher cash feeder cattle prices guided feeder futures higher while higher CBOT corn futures limited the advance and weighed on deferred months.

Feeders at the closely watched Oklahoma City auction were up $1 to $3, instances up $5 this week on very good demand, after gaining $1 to $4 last week. And the latest CME feeder cattle index for April 29 was up 25 cents at $104.32 per cwt, the highest since Dec 28.

May feeder cattle 2FCK8 ended up 0.625 at 105.975 cents per lb and August 2FCQ8 was up 0.300 at 108.525 cents.

Lean hog futures rebounded on short covering and fund buying as the market partially corrected after being sharply lower on Tuesday.

June lean hogs 2LHM8 finished up 0.925 cent at 73.475 cents per lb and July 2LHN8 was up 0.175 cent at 75.350.

The losses in hog futures on Tuesday were in reaction to news Russia that delisted four U.S. pork plants effective May 5 due to concerns about tetracycline, an antibiotic. But some traders felt the delisting would be short lived and pork exports would remain strong overall.

"The news wasn't all the bearish. If anything its given us a good buying opportunity to get back in and I think we retest the old highs," said Mylett. "They are going to work out the problem in the matter of a week or two - it's not permanent."

Also bullish for hog futures was a drop in the average hog weight last week in the Iowa/Minnesota markets. The drop may indicate producers are current and hog supplies are declining.

USDA reported the average weight in Iowa/Southern Minnesota markets last week at 264.6 lbs, down from 265.6 the previous week and 267.5 a year earlier.

Also, USDA on Tuesday put the pork cutout value up 39 cents at $73.62 per cwt, the highest since July 30, 2007.

Pork belly futures followed hog futures higher with May 2PBK8 closing up 1.400 cents at 75.400 cents per lb and July 2PBN8 up 0.875 at 75.975 cents. (Reporting by Jerry Bieszk; Editing by Marguerita Choy)