October 4, 2017 / 9:02 PM / a year ago

LIVESTOCK-Most CME live cattle futures gain on spreads

    * Feeder cattle finishes lower
    * Most hog contracts end weaker

    By Theopolis Waters
    CHICAGO, Oct 4 (Reuters) - Chicago Mercantile Exchange live
cattle gained modestly on Wednesday during a trading strategy
known as bear spreading in which investors sold October futures
and simultaneously bought deferred months.
    Some market participants used the spreads to avoid  possible
deliveries on Monday evening against the October contract.
    Profit-taking and uncertainty about this week's prices for
market-ready, or cash, cattle dropped futures from session highs
and further weighed on the October contract.
    October         live cattle finished down 0.025 cent per
pound at 109.075 cents. December         closed up 0.025 cent at
 114.925 cents, and February ended 0.400 cent higher at 118.925
    Wednesday morning's Fed Cattle Exchange (FCE) resulted in
$108 per cwt average cattle prices - about steady with last
week's trade in the U.S. Plains. 
    Bullish investors believe processors might bump up bids for
remaining cattle following FCE's $108 per cwt sales. They also
cited recent futures advances and extremely high packer profits.
    Market bears contend that more animals for sale than last
week, adequate near-term supplies and readily available cattle
contracted against the futures market might hurt cash returns.
    Investors will closely monitor wholesale beef demand as pork
garners the retail advertising spotlight during October's
National Pork Month.           
    Profit-taking, technical selling and steady-to-lower cash
feeder cattle prices dropped CME feeder cattle. 
   October         ended 0.325 cent per pound lower at 152.100
    Most lean hog contracts at the CME settled moderately lower
on profit-taking after two days of gains led by upward-trending
cash prices, said traders.
    Investors sold deferred months and at the same time bought
the October contract ahead of its expiration from trading on
Oct. 13. The trading tactic is known as bull spreads.
    October         hogs ended 0.450 cents per pound higher at
60.325 cents. Most actively traded December         finished
0.175 cent lower at 61.900 cents, and February         closed
down 0.050 cent at 67.300 cents.
    There is no shortage of hogs, but packers want to run as
many animals through their plants as possible while taking
advantage of their impressive profits and good pork demand, a
trader said. 
    He said some investors were skittish about buying deferred
hog contracts given the outlook for increased supplies over the
next several weeks.

 (Reporting by Theopolis Waters; Editing by Steve Orlofsky)
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