February 14, 2017 / 9:08 PM / a year ago

LIVESTOCK-Firmer beef quote rallies CME live cattle futures

    * Feeder cattle ends up sharply
    * Hog contracts finishes higher

    By Theopolis Waters
    CHICAGO, Feb 14 (Reuters) - Chicago Mercantile Exchange live
cattle futures posted strong gains on Tuesday, reversing
Monday's selloff, fueled by short-covering and wholesale beef
price rebound, said traders.
    Technical buying ensued after investors bought the February
contract and simultaneously sold deferred months in a trading
strategy known as bull spreads. 
    February live cattle         closed 1.450 cents per pound
higher at 117.375 cents, and above the 40-day moving average of
117.310 cents. April         ended 1.475 cents higher at 114.000
    The morning's choice wholesale beef price, or cutout, was up
20 cents per cwt to $188.46 from Monday. Select cuts were $1.38
higher at $187.96, the U.S. Department of Agriculture said.
    Market bulls are betting that futures' and the beef cutout 
price turnaround will convince packers to pay steady prices for
cattle this week, despite their negative margins and more
animals for sale than last week.
    Tuesday's average beef packer margins were at a negative
$79.00 per head, down from negative $57.50 a week ago, as
calculated by HedgersEdge.com.
    Last week, slaughter-ready, or cash, cattle in the U.S.
Plains traded at $119 to $120.50.
    Wednesday morning's Fed Cattle Exchange sale of around 4,800
animals may act as a barometer for subsequent cash prices in the
    Fund buying, live cattle futures advances and strong cash
feeder cattle prices pulled up CME feeder cattle contracts.
    March feeders         closed 2.175 cents per pound higher at
124.000 cents.
    CME hogs settled higher led by firmer cash and wholesale
pork prices, said traders.
    They said deferred hog contracts topped technical resistance
levels, which triggered buy stops and fund buying.
    February hogs        , which expired at noon CST (1800 GMT),
ended up 0.425 cent per pound to 75.175 cents. Most
actively-traded April         closed 1.600 cents higher at
71.300 cents, and above the 10-day moving average of 70.690
    Tuesday morning's cash hog price in Iowa/Minnesota averaged
$71.96 per cwt, up 37 cents from Monday, the USDA said.
    U.S. government data on Tuesday morning showed the average
wholesale pork price, or cutout, $1.45 per cwt higher at $86.59
from Monday, mostly led by $3.55 higher pork bellies.
    Packer margins remain strong and they are still moving
product in the face of record-high production, said Hehmeyer
Trading + Investments senior hog futures trader Tom Cawthorne.
    He expects strong pork belly prices for at least another
week or so due to robust bacon demand.  

 (Reporting by Theopolis Waters; Editing by Marguerita Choy)
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