June 1, 2017 / 8:28 PM / 2 years ago

LIVESTOCK-Strong cash prices boosts CME live cattle by 3-cent limit

    * Feeder cattle up 4.500-cent limit
    * Lean hogs stumble on profit-taking

    By Theopolis Waters
    CHICAGO, June 1 (Reuters) - Chicago Mercantile Exchange live
cattle        settled up their 3.000 cent per pound daily price
limit on Thursday, fueled by short-covering following
stronger-than-expected cash prices, said traders.
    Fund buying and futures' discounts to this week's cash
returns enhanced market gains, they said. 
    June         and August         closed limit up at 127.425
and 124.700 cents, respectively. Live cattle's limit will expand
to 4.500 cents on Friday.
    Market-ready, or cash, cattle on Thursday in the U.S. Plains
brought $135 to $137 per cwt, up from $132 to $133 a week ago.
    "I guess we found out packers needed more cattle than we
thought," said Domenic Varricchio, a broker with Schwieterman
    Impressive profits allowed packers to pay more for cattle
for delivery next week - the first full week of production after
Monday's Memorial Day holiday, a trader said.
    He said people are surprised that beef cutout values are
hovering well above $200 per cwt, despite retailers planning to
feature more less-costly pork and chicken for summer grilling
    Thursday morning's average wholesale beef price was up 4
cents per cwt to $245.58 from Wednesday. Select cuts dropped
$1.08 to $217.10, the U.S. Department of Agriculture said.
    The average beef packer margins on Thursday were a positive
$163.25 per head, up from a positive $147.00 last week, as
calculated by HedgersEdge.com.
    Live cattle future's limit-up move drove CME feeder cattle
up their 4.500-cent limit.
    August feeders         ended limit up at 157.075 cents per
pound. CME's feeder cattle limit will increase to 6.750 cents. 

    Profit-taking and Thursday morning's lower cash price
undercut CME lean hogs, said traders.
    Some investors sold June futures, which will expire on June
14, and simultaneously bought deferred months in a trading
strategy known as bear spreads.
    A few market participants sold bearish lean hog contracts
and at the same time purchased bullish live cattle futures.
    June         closed 1.000 cent per pound lower at 80.925
cents. July         ended 0.900 cent lower at 82.125 cents, and
earlier spiked to a new contract high of 83.525 cents.
    Thursday morning's average cash hog price in the western
corn belt was $73.01 per cwt, $2.02 lower than on Wednesday, the
USDA said.
    A few processors might have enough inventory for an expected
big Saturday slaughter, a trader said. But highly profitable
packer margins, tight supplies and good pork demand suggest
processors will again compete for supplies soon, he added.

 (Reporting by Theopolis Waters; Editing by Jonathan Oatis)
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