Cattle futures were mixed on Thursday as traders reckoned with a bumpy start to the week's cash market.
Traders are still processing a sharp reversal on Tuesday that saw cattle futures drop on weak technical indicators even as beef prices and other signs of demand were strong.
Continue Reading Below
Tuesday's break "changed everything," said Jim Clarkson, an analyst at A&A Trading Inc. at the Chicago Board of Trade. "We're going to have to wait and see how it all plays out."
An underwhelming start to the cash market, after a series of delays, limited gains in cattle futures. The closely watched online Fed Cattle Exchange auction that typically kicks off trade was postponed twice due to technical difficulties.
A little over 300 cattle sold when the online auction went ahead on Thursday morning, down from 1,250 the prior week, though average prices of $1.37 were sharply higher. The U.S. Department of Agriculture also reported cash sales in Iowa of $1.34 a pound for live cattle and $2.20 a pound dressed, along with $2.20 a pound dressed in Nebraska.
Overall sales volume was light, however, and cattle futures eased off highs earlier on Thursday morning as traders bet that demand wouldn't be strong enough to counter a seasonal downtrend in futures.
"It would probably take another round of higher cash fed cattle sales next week in order to get up through the reversal highs from Tuesday morning," said Troy Vetterkind, of Vetterkind Cattle Brokerage in Thorp, Wis. "That will be the big challenge."
Live cattle futures for June delivery closed 0.1% higher at $1.31375 a pound at the Chicago Mercantile Exchange.
Feeder cattle futures, which derive from herds that are still being fattened, fell. CME August contracts dropped 0.6% to $1.5395 cents a pound, with a rally in corn futures making the grain needed to feed those cattle considerably more expensive for producers.
Hog futures rose, as traders continued betting that unusually high beef prices would help create more demand for pork. Both cash hog and pork prices were higher as of Thursday morning.
CME June lean hog futures gained 0.5% to 82.025 cents a pound, while the July contract climbed 1.4% to 82.2 a pound.
"When you have beef prices as high as they are, that's going to support the hog prices," Mr. Clarkson said.
Write to Benjamin Parkin at firstname.lastname@example.org
(END) Dow Jones Newswires
June 08, 2017 15:07 ET (19:07 GMT)