* Cattle post best daily pct rise since early January
* Short-covering, equities provide added cattle lift
* Hogs track cattle, cash price uncertainty limit gains
By Theopolis Waters
CHICAGO, April 12 (Reuters) – U.S. cattle futures surged
about 2 percent on Thursday as cash prices came in better than
traders had anticipated and touched off another round of
short-covering.
Chicago Mercantile Exchange live cattle spot April, and
most-actively traded June, breached their respective 10-day
moving averages at 119.97 cents and 116.07 cents, which
triggered fund buying.
By day’s end, CME live cattle notched their biggest
one-day percentage point increase since Jan. 3, aided by the
spot-April contract that hit its 3-cent daily price limit at
121.375 cents.
CME spot April live cattle ended 2.875 cents higher,
up 2.43 percent, at 121.250 cents per lb. Most-actively traded
June cattle closed up 2.100 cents, or 1.83 percent, at
117.150.
Short-covering from Wednesday extended into Thursday after
packers surprisingly raised bids for slaughter-ready cattle even
though their operating margins have hemorrhaged red ink since
September 2011.
Early-week consensus had processors keeping a tight lid on
cattle prices as wholesale beef values resumed their downward
trend. Also, more cattle were available for sale this week than
a week ago.
As of Thursday, live-basis cattle in the Plains traded fully
steady with last week’s mostly $122 to $123 per cwt sales.
“A lot of people at first put on a huge number of April/June
bear spreads thinking cash would come down. They were caught off
guard by that $122 and $123 Wednesday evening trade when they
came in this morning,” a CME live cattle trader said.
Others who looked for a reason to buy cattle futures turned
to April’s discount to cash prices and the market’s technically
oversold condition.
Cattle futures drew further support from the lower dollar
and higher equities, boosted by diminished euro zone debt
worries and China’s strong GDP growth. Both factors overshadowed
disappointing U.S. weekly jobless claims data.
“Cash was the catalyst to get some short-covering and had
some people picking a bottom,” said Jim Clarkson. “The stock
market was up big and the dollar being down doesn’t hurt,” said
Jim Clarkson with A&A; Trading.
The government’s morning beef cutout, which reflects the
price of beef at wholesale, showed choice beef at $176.55 per
cwt — another 51-cent drop on top of Tuesday evening’s $1.02
setback.
HedgersEdge.com estimated beef packer margins at a negative
$96.80 per head, which was up $5.30 from Wednesday and $23.95
from a week ago.
Feeder cattle contracts climbed sharply on live cattle’s
upswing that drove August and September up their 3-cent trading
limits.
Actively traded May feeders finished 2.825 cents
higher, up 1.89 percent, at 152.250 cents per lb.
HOGS TAKE CUE FROM CATTLE
CME hog futures gained modestly with the help of the live
market run-up along with Wednesday’s pork cutout and cash hog
price bounce.
However, uneasiness about cash hog prices heading into the
weekend and spreading out of hogs into cattle minimized hog
futures advances.
Spot April hogs closed up 0.350 cent, or 0.42
percent, at 83.525. Most active June ended 0.575 cent higher, up
0.62 percent, at 93.225 cents.
“The cutout yesterday afternoon was probably the best they
had in weeks. But some of the guys who were long hogs and short
cattle liquidated those positions when cattle started turning
higher yesterday,” said independent hog futures trader Bill
Cipolla.
USDA’s morning data estimated the average price of hogs at
the benchmark Iowa/southern Minnesota market at $79.33 per cwt,
down $1 from the previous day.
(editing by Jim Marshall)
