CME Live Cattle Ends Higher, but Off Session Tops

Chicago Mercantile Exchange live cattle futures closed higher Tuesday on fund buying, short-covering and solid beef demand that briefly lifted the June contract to its 3.000-cent daily price limit, said traders.

They said profit-taking and caution before this week's cash prices pulled futures from new contract highs.

June ended 2.925 cents per pound higher to 127.050 cents, and hit a fresh high of 127.125 cents. August closed up 0.625 cent to 120.800 cents and made a new high of 123.175 cents.

Tuesday morning's average wholesale beef price climbed $2.50 per cwt to $228.77 from Monday. Select cuts surged $3.68 to $213.13, the U.S. Department of Agriculture said.

Some investors attributed this week's wholesale beef price gains to grocers buying product for pent-up spring grilling demand.

They also pointed out that May is National Beef Month, which has supermarkets and restaurants featuring it for Mother's Day meals.

Beef demand remains strong despite increased cattle slaughters, said American Restaurant Association chief analyst David Maloni.

"We've been very impressed with beef price action and statistics around demand, particularly with forward sales for grinds such as hamburger," he said.

Market participants await this week's sale of market-ready, or cash, cattle in the U.S. Plains that a week ago moved from $134 to $136 per cwt.

Negative packer margins and more cattle for sale than last week might weigh on cash returns, said traders.

They said last weekend's heavy snows in parts of the Plains resulted in fewer animals for Wednesday morning's Fed Cattle Exchange auction.

Weaker corn prices and initial live cattle futures gains spiked CME feeder cattle to their 4.500-cent price limit and a 13-month high.

May feeder cattle ended 1.025 cents per pound higher at 149.625 cents, and marked a new high of 153.100 cents. 

Lower Hog Settlement

Fund buying and higher cash prices pushed up CME lean hogs, said traders.

May closed 0.825 cent per pound higher at 66.950 cents. Most actively traded June ended 0.875 cent higher at 74.150 cents and topped its 40-day moving average of 74.081 cents.

Packers want to capitalize on their impressive margins by maintaining the flow of hogs through plants, a trader said.

A major Midwest hog processor, idled by weather and maintenance issues on Monday, did not resume operations on Tuesday, a regional hog merchant said.

USDA estimated Tuesday's hog slaughter at 417,000 head, 22,000 fewer than a week ago.