CME Live Cattle Sag Despite Fundamentals; Funds Roll Positions
Chicago Mercantile Exchange live cattle nearby contracts on Wednesday were weakened by funds that sold, or "rolled," June positions into back months ahead of similar moves early next week, said traders.
Nearby market losses trumped future's bullish discount to cash prices, strong wholesale beef values and triple-digit beef packer profits.
June live cattle closed 0.975 cent per pound lower at 104.850, and August ended down 0.100 cent at 103.975 cents.
Almost 400 of the nearly 3,000 head of cattle at Wednesday's Fed Cattle Exchange brought mostly $122.50 per cwt.
A few slaughter-ready, or cash, cattle in Kansas on Tuesday fetched $118 versus $124 a week ago. Other cattle there and in Texas are priced at $126.
The bulk of last week's cash cattle sales in the Plains were $118 to $126.50.
"Everything is flowing in a very positive manner. It's hard to get extremely negative when you've got everybody in the top end of the supply chain making a lot of money," said West Oak Commodities analyst Tom Tippens.
Packer margins remain strong as beef demand picks up for spring grilling, May National Beef Month and retail preparation for the Memorial Day holiday, he said.
Cargill's Schuyler, Nebraska beef processing plant resumed normal operations after Tuesday's labor dispute, a company spokesman said on Wednesday.
Short-covering, steady-to-firmer cash feeder cattle prices and higher back-month CME live cattle futures boosted the exchange's feeder cattle contracts.
May closed up 0.725 cent per pound at 138.625 cents.
Hogs End Weaker
CME lean hogs dropped on profit-taking following the morning's cash price retreat, said traders.
They said some investors were put off by future's sizable premiums to the exchange's hog index for April 30 at 62.45 cents.
May closed 0.550 cent per pound lower at 66.900 cents. Most actively traded June ended down 0.400 cent at 73.500 cents.
Some processors have enough hogs through the rest of the week, a trader said. Packers may bid up for hogs in areas where spring planting has taken priority over moving pigs to market, he said.
Wholesale pork values gained for a fourth straight session, fueled by spring cook outs and higher pork belly prices leading into the summer bacon-lettuce-tomato sandwich season, the trader said.
