CME cattle futures end higher on cash quotes

 

 

Pit-traded CME live cattle finished higher Monday (May 10) in response to light early-week cash cattle quotes and futures' discounts to last week's cash sales.

 

A small number of cash-basis cattle in Kansas Monday sold for US$100 per hundredweight. June and August were already underpriced to cash last week that brought US$99-100. Fed cattle the previous week went for mostly US$98-98.50.

 

Fewer cattle for sale this week and extremely profitable beef packer margins fanned notions of steady-to-better money for cash. Speculative buyers should hold interest in front months as long as they are still underpriced relative to cash.

 

Fund-buying and pre-established buy orders contributed to live cattle advances after June and August eclipsed recent highs. Both months were the battleground for give-and-take between traders who bought June and sold August on spreads versus those who conducted the Goldman roll.

 

Spreads consist of trading two or more months simultaneously with taking advantage of the price differences between them.

 

Monday was the second of five days for the current Goldman roll period that involved funds shifting some of their June long positions into August. The process is linked to the Standard & Poor's Goldman Sachs Commodity Index.

 

Meanwhile, the Dow Jones Industrial Average steep climb and the dollar's descent motivated far cattle-month buyers.

 

High-end beef cuts could benefit from consumer perceptions that the global financial situation has stabilized after a debt relief package was floated to Greece. And, the dollar's slide improves US beef export prospects moving forward.

 

Spot-June live cattle closed up 0.80 cent, or 0.8%, at 96.70 cents a pound. Nearby-August finished 0.87 cent higher, or 0.9%, at 95.07 cents.

 

Feeder cattle at the CME ended higher as well fuelled by profit-taking by traders who had bet on futures' losses Friday. Buying in the neighbouring live cattle pit provided added feeder cattle support. Spot-May closed up 0.20 cent, or 0.2%, at 112.62 cents. Most-actively traded August finished 1.05 cents higher, or 0.9%, at 115.92 cents.