LIVESTOCK-Tighter supplies lift US hogs; live cattle firm

Mon Oct 8, 2012 7:47pm GMT
 

* December hog futures benefit from spreads
    * Live cattle firm after beef prices rebound
    * Feeders inch upward as corn drift lower

    By Theopolis Waters
    CHICAGO, Oct 8 (Reuters) - U.S. hog futures finished higher
on Monday as some packers raised bids for cash hogs whose
numbers have tightened in recent weeks, said analysts and
traders.
    Spreaders also bought Chicago Mercantile Exchange December
hogs as the spot October contract prepares to expire on Oct. 12.
    Some traders also sold distant trading months and bought
December with the view that premiums in the deferred contracts
may not be warranted if corn prices continue to come down.
    CME spot October hogs closed up 0.150 cent per lb to
81.475 cents. Most-actively traded December ended 0.325
cent higher at 76.875 cents and February at 82.300 cents,
up 0.300 cent.
    "There are still a lot of hogs out there that could soon
work against cash prices. But for now, there aren't as many hogs
as a month or so ago when producers actively liquidated their
herds as feed costs skyrocketed due to the drought," a traders
said.
    The U.S. Department of Agriculture estimated Monday's hog
slaughter at 435,000 head, 2,000 less than a week earlier but
9,000 more compared with the same period a year ago.
    Packers will compete for hogs as long as their margins hold
up and grocer stores buy product to feature during National Pork
Month in October, he said.
    HedgersEdge.com estimated the average pork packer margin for
Monday at positive $3.20 per head, which dropped $5.50 from
Friday and was down $1.85 versus the margin for Oct. 1.
        
    CATTLE FIRMER
    Live cattle futures settled moderately higher in thin choppy
 Columbus Day action as wholesale beef prices bounced back after
dropping on Friday, traders and analysts said.
    USDA Monday morning estimated the wholesale price for choice
beef at $190.61 per cwt, 62 cents higher than on Friday and
select cuts rose 77 cents to $176.41.
    Futures sagged briefly at the start on profit taking.
Traders also cited Friday's wholesale beef price lapse, which
typically occurs this time of year as grocers feature more hams
and turkeys during the year-end holiday season.
    The recovery in wholesale beef values Monday morning had
more to do with packers cutting slaughters to get a grip on
their elusive margins than demand for beef by retailers, a
trader said.
    The estimated average beef packer margin for Monday was
negative $43.60 per head, compared with negative $15.92 on
Friday and negative $52.15 for Oct. 1.
    Spreaders also sold deferred contracts and bought nearby
trading months as corn prices retreated and amid simmering
domestic economic worries.
    "I'm wondering if traders may be very hesitant to have long
positions in the back end of the market, at a sizable premium,
with the problem of the fiscal cliff looming at the end of the
year," said David Hales, president of Hales Trading Co, Inc.
    Meanwhile, investors waited for cash cattle to change hands
against the backdrop of 10,600 fewer animals available for sale
than last week and unprofitable packer margins.
    Today is also the first notice day for deliveries against
the spot October live cattle contract that will expire on Oct
31.
    Spot October closed up 0.300 cent per lb higher at
123.350 cents. Most-actively traded December settled up
0.200 cent at 126.400 cents.
    Feeder cattle at the CME settled steady to firmer helped by
modest live cattle market gains and lower corn prices, easing
input costs for cattle feedlots.
    CME spot October closed unchanged at 144.825 cents
per lb. Most-actively traded November ended up 0.100 cent
to 146.300 cents and January finished at 149.150 cents,
up 0.150 cent.

 (Editing by Marguerita Choy)

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