CHICAGO, Dec 28 (Reuters) - Chicago Mercantile Exchange live cattle on Thursday reached a seven-week high, propelled by expectations for steady-to-higher cash prices by week’s end, said traders.
Thursday’s wholesale beef price upswing, short-covering and year-end positioning furthered market advances, they said.
December live cattle, which will expire on Friday, closed 2.525 cents per pound higher at 124.550 cents. Most actively traded February ended 1.250 cents higher at 122.250 cents.
Packers on Thursday bid $118 per cwt for slaughter-ready, or cash, cattle in the U.S. Plains that were priced at $122 to $125. A week ago cash cattle sold from $119 to $120.
Retailers bought beef to avoid possible shortages due to holiday plant disruptions, and as “turkey and ham fatigue” grew after the Thanksgiving and Christmas holidays, said traders and analysts.
They said steady-to-firmer cash prices in recent weeks suggest packers need cattle despite plant closures over the three-day New Year’s holiday weekend.
Bitterly cold temperatures in the Plains and Midwest, which tends to cause livestock to slowly gain weight, is supportive for near-term cash returns, they added.
As long as the weather stays more winter-like, cattle will be less available at a time when some packers are short on inventory, said Agrivisor Services analyst Dale Durchholz.
Short-covering and live cattle futures buying resulted in higher CME feeder cattle contracts.
January closed up 0.425 cent per pound to 145.600 cents.
End-of-year positioning and CME live cattle market buying helped the exchange’s lean hog futures reverse Wednesday’s losses, said traders.
They said the recent run-up in cash hog prices contributed to futures gains.
February closed 0.525 cent higher at 71.550 cents. April ended up 0.425 cent to 75.700 cents.
Most packers have enough hogs for the rest of this week, but are competing for animals for next week’s production, said analysts and traders.
“I think our numbers will be tight enough once we get past the holiday,” a Midwest hog merchant said.
Frigid temperatures across most of the Midwest could slow down weight gains in animals raised in swine barns that are not fully enclosed, said Midwest hog dealers.
They said even farmers who raise pigs in temperature-controlled buildings all of their lives find it difficult to load them onto trucks destined for packing plants.
“It’s hard to shove them (hogs) out the door when it’s this cold,” an Indiana hog dealer said. (Reporting by Theopolis Waters; Editing by Richard Chang)