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CME: Live and Feeder Contract Post Gains, Thursday

10 May 2013

US - Live and feeder contracts closed with decent gains, supported by short covering, oversold charts, and improving packer margins.

Moderate cattle trade volume surfaced in Kansas before noon with most live sales at $126, $2 lower than last week. Though packer interest was evident in parts of the North, buyers and sellers just couldn't get together, writes futures analyst, John Harrington.

June cattle managed to close 35 higher on the session and well up from the early lows. December cattle closed higher on the day after first posting a contract low and the reversal may be seen as a positive technical development, say market experts at CME.

June pushed under 120.00 into the pit opening this morning but was trading slightly higher on the day into the mid-session and closed at 120.55.

Talk of the oversold condition of the market after the sharp break of the past week helped to spark some bargain hunting on the early break. Weekly U.S. beef export sales for the week ending May 2nd came in at just 6,900 metric tonnes, compared with the prior 4-week average of 14,300.

Cumulative sales for 2013 have reached 343,700 metric tonnes, down -9.7 per cent from last year's pace. The huge discount of futures to the cash market has discouraged new sellers; especially with beef prices soaring to new all-time highs late on Wednesday

Cash is bid at $125.00 in Texas and there does not appear to be any offers at present. Cash was $128.00-$129.00 last week and some traded at $126.00 on Wednesay.

Ideas that a colder and wetter trend for this weekend might limit consumer demand for beef helped to pressure the market but the forecast for next week and beyond shows more seasonal temperatures and a possible jump in consumer demand over the next month.

Boxed-beef cut-out values at mid-session came in at $204.91 which is up $.24 on the day and up from $200.58 last week at this time and a new all-time high.

Slaughter came in below trade expectations at 119,000 head.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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