Cattle Futures Gain on Profitable Packing Margins

By Benjamin Parkin Features Dow Jones Newswires

Cattle futures ?climbed Monday while hogs slid, as traders bet that wide beef packer margins would keep prices in the cattle market high.

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The HedgersEdge beef packer index was at $135.45 a head on Monday, compared with standard pork processing margins of around $30 a head. That extra profitability would allow packers to put more money into the cash trade for cattle, analysts said.

"Cattle have a clear advantage over hogs" ahead of Father's Day on June 18, said Mike Zuzolo, president of Global Commodity Analytics & Consulting in Atchison, Kansas. "The futures market is seeing that and pricing that inÂ…The spread trade of the day is buy cattle and sell hogs."

Live cattle futures for June delivery rose 1% to $1.321 a pound on Monday at the Chicago Mercantile Exchange, extending a ?rally that began midway through last week as packers paid feedyards more for cattle in the cash trade. Feeder cattle contracts also rose.

Hog futures, which ?rose through the month of May, fell as traders took profits. CME June lean hog futures dropped 0.6% to 80.725 a pound, while the more actively traded July contract fell 1.9% to 80.425 a pound.

But both pork and beef prices rose, a sign of strong short-term demand. A pound of pork rose 90 cents to $91.66 per 100 pounds, while beef gained $2.18 to $247.42 per 100 pounds. Analysts say higher meat prices could further buttress packer margins and give them flexibility to spend more in the cash markets this week.

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Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

June 05, 2017 15:18 ET (19:18 GMT)