June 27, 2018 / 9:04 PM / 2 months ago

LIVESTOCK-Early-week cash prices buoy CME live cattle futures

    CHICAGO, June 27 (Reuters) - Chicago Mercantile Exchange
live cattle        closed higher on Wednesday, lifted by initial
prices for market-ready, or cash, cattle and short-covering
after recent market losses, traders said.
    Thinly traded June futures, which will expire on Friday, led
advances. Some investors bought that contract and simultaneously
sold deferred months in a trading strategy known as bull
spreads.
    "Wednesday's $106 per cwt cash sales makes the August
contract look cheaper after June goes off the board," a trader
said. 
    On Wednesday packers paid $106 per cwt for cash cattle in
the U.S. Plains. Last week cattle brought $108 to $110.
    Processors need fewer cattle for the U.S. Fourth of July
holiday-shortened work week, traders and analysts said. They
also cited the near seasonal peak in wholesale beef demand and
increased supplies ahead.           
    "Right now the packer is in control of this market because
of the numbers. Until that ends, then it's hard to buy
(futures)," said A&A Trading broker Jim Clarkson.
    Still, other feedlots are holding out for more money for
remaining cattle, citing historically high packer margins.
       
    A packing plant in the Plains was fully operational on
Wednesday after being offline Monday and Tuesday due to
equipment repairs, traders and analysts said.   
    June         live cattle closed 1.100 cents per pound higher
at 107.025 cents. Most actively traded August         ended up
0.300 cent at 102.725 cents.
    CME feeder cattle ended weaker, reflecting lower cash feeder
cattle prices, said traders.
    Feeder cattle futures are effectively too high to hedge
relative to deferred live cattle contracts, Clarkson said,
adding, "It doesn't pencil out." 
    August         closed 0.325 cent per pound lower at 145.775
cents.
    
    HOG FUTURES MOVE HIGHER
    CME lean hogs        rose for a second straight session, led
by short-covering and future's lower price, or discount, to the
exchange's hog index for June 25 at 85.63 cents, said traders.
    Downward-trending cash hog prices and simmering U.S. trade
issues capped deferred trading month advances, they said.   
    Packers paid less for hogs during the past six sessions to
recoup lost margins and as plants prepare to shutdown for the
Fourth of July holiday, said traders and analysts.        
        
    Market participants adjusted positions before the U.S.
Department of Agriculture's quarterly hog report on Thursday.
            
    July         hogs ended 1.100 cents per pound higher at
80.225 cents. August         closed up 0.300 cent at 75.050
cents.

 (Reporting by Theopolis Waters
Editing by Leslie Adler)
  
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