CHICAGO: Chicago Mercantile Exchange live cattle futures settled higher on Tuesday after fund buying helped them reclaim some of Monday's losses, traders and analysts said.
Speculative buyers were drawn to futures' continued discount to last week's cash cattle prices.
"It looks to me like the market is trying to put in a bottom given futures' discount to cash," said K&S Financials analyst Jack Salzsieder.
Late-day commercial selling pulled CME live cattle from session highs.
CME live cattle June finished below the 40-day moving average of 120.996 cents. It closed at 120.950 cents, or up 0.225 cent per lb.
August broke through the 10-day and 20-day moving averages of 119.595 cents and 119.842 cents. It finished 0.650 cent higher at 120.125 cents.
Traders awaited the sale of cattle in the cash market. There were no cash bids or asking prices reported, according to feedlot sources.
Investors look for cash cattle to trade steady to weak compared with prices at mostly $124 to $125 per hundredweight last week.
Packers need cattle given this week's modest decline in supplies, analysts and traders said. But slipping profit margins and weaker cutout could weigh on cash, they said.
Government data quoted wholesale price of choice beef, or cutout, on Tuesday morning at $205.53 per cwt, down 64 cents from Monday. Select cuts dropped $1.34 cents to $184.10.
The difference, or spread, between choice and select cuts grew to $21.43 per cwt, its widest since Dec. 11, 2012, at $21.50.
Wholesale beef prices typically decline after the US Memorial Day holiday, a trader said. It seems lower-end beef cuts, particularly ground beef, are being discounted for post-holiday grilling, he said.
Higher live cattle futures and weaker corn prices lifted CME feeder cattle.
Cash strength at the most-watched Oklahoma City feeder cattle market helped drive up futures.
August feeder cattle closed at 145.575 cents, up 1.150 cents per lb. September settled at 147.550 cents, or 1.050 cents higher.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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