Cattle futures were mixed on Monday as prices recovered from a sharp downward correction.
A supply pinch has sent cattle futures soaring recently. But a reversal on Friday dragged contracts down to their lower daily limits. Futures began to turn around again on Monday as wholesale beef prices rose.
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"We're getting our mojo back," said Tim Hackbarth, a strategist at advisory Zaner Ag Hedge. "The bull market is still intact."
Live cattle futures for June delivery, the front-month contract, were pressured as hedge funds sold that contract to switch into others with later delivery dates. June futures fell 0.525 cent, or 0.4%, to $1.27775 a pound at the Chicago Mercantile Exchange, but contracts for August delivery onwards all bounced. Feeder cattle contracts also rose.
Beef prices rose to $2.41 per 100 pounds as of Monday morning, extending gains made last week, while traders will be closely watching the cash trade for cattle later this week for signs of continued strength. Prices rose to highs of $1.47 last week, as lighter-weight cattle forced beefpackers to pay more for inventory ahead of a seasonal May grilling boost.
High cash sales again this week could give another boost to cattle futures, Mr. Hackbarth said, which have the potential to continue rallying until June when more supply finally creeps back into the market.
Hog futures bounced on Monday, with CME June futures rising 1.050 cents, or 1.4%, to 77.375 cents a pound. Tighter supplies of hogs have also encouraged a recent rally, with futures rising sharply since late April. Packers slaughtered fewer hogs and produced less meat last week than than the two previous weeks.
But the seasonal bump in demand meant retailers were willing to pay more for that meat, with wholesale pork prices rising 1.58 cents to 66.70 cents a pound.
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(END) Dow Jones Newswires
May 08, 2017 15:16 ET (19:16 GMT)