CHICAGO - U.S. cattle futures finished higher on Thursday after traders who had taken short positions pocketed profits ahead of the three-day Easter holiday weekend.
Despite the day's rise, Chicago Mercantile Exchange live cattle extended its string of weekly losses to seven because of lingering fallout from what critics called "pink slime" that sent wholesale beef values lower.
Chicago Mercantile Exchange spot April live cattle rose 0.425 cent, or 0.36 percent, to 118.325 cents per lb. Most active traded June cattle gained 0.700 cent, or 0.61 percent, to 115.825 cents.
Live cattle contracts edged upward early in thin holiday volume, boosted by short-covering and positive U.S. beef export figures.
The U.S. Department of Agriculture's weekly beef export sales data showed net sales at 13,200 tonnes, mostly to Mexico, which was up 3,500 tonnes from last week.
Speculative buyers were also swayed by futures that were underpriced based on slaughter-ready cattle that traded at mostly $123 to $123 -- $3 lower than a week ago. CME live cattle gained traction on sentiment that the market was oversold. That, despite beef packer margins at their worst ever, which played a role in how much they were willing to pay for cattle.
Beef processors were also reluctant to spend more for supplies as the beef cutout, which reflects the price for beef at wholesale, sank 22 out of past 25 business days, according to an industry source.
The government's cutout data estimated choice beef at $178.51 per cwt, down $2.13 from Wednesday evening. That's the lowest since $179.82 on Sept. 8.
"We couldn't sell beef when we were close to $200 early last month and are having a problem around $180," said Don Roose with U.S. Commodities.
However, he said traders are more optimistic that retailers would purchase beef soon with the grilling season close at hand. HedgersEdge.com estimated beef packer margins at a negative $120.75 per head, shattering Friday's negative $109.25 mark as the biggest loss since the firm began keeping such data 22 years ago.
Packers' attempts at reigning in elusive margins by cutting slaughter and slashing costs for cattle were thwarted by turmoil created over industry-labeled lean finely textured beef (LFTB).
"When we got hit with the negative demand out here on the beef from LFTB, it was quite a negative for the image of beef purchases. Even the stores were a little cautious about featuring it," said Roose from his office in West Des Moines, Iowa.
Retailers were already having a difficult time selling beef as shoppers wrestled with higher gasoline prices, he said. Feeder cattle contracts turned up as well with live cattle market advances and short-covering. Actively-traded April feeders closed up 0.050 cent, or 0.03 percent, at 148.725 cents per lb.