Chicago | Reuters — U.S. live cattle futures jumped to a 2-1/2 week peak on Tuesday while lean hogs were mostly higher on support from investment fund buying linked to big gains in wholesale beef prices, traders and analysts said.
Most-active Chicago Mercantile Exchange June live cattle futures gained for the fifth straight session, settling up 1.4 cents at 113.7 cents/lb. (all figures US$). April live cattle climbed 2.15 cents to 123.25 cents.
Cattle prices surged at midday after the U.S. Department of Agriculture showed choice-grade beef up $2.06 to $209.52/cwt. Gains in prices for the meat stoked optimism for more aggressive buying in cash cattle markets in the U.S. Plains.
News this week that U.S. trade negotiators were seeking to hammer out deals to resume beef exports to China also provided a bullish undercurrent to the cattle market, even if it could take months for China to resume beef imports that have been effectively halted since 2003.
“Buyers are stepping in,” said independent livestock futures trader Dan Norcini, adding that investors were exiting earlier short positions as well as making new long bets.
Feeder cattle hit contract highs
All contracts in the thinly traded CME feeder cattle futures notched life-of-contract highs, with most-active May feeder cattle ending up 1.95 cents at 137.325 cents per pound, near their earlier high of 137.7.
Feeders were buoyed by gains in live cattle prices and by demand for younger cattle to be raised on greening pastures. Cash feeder prices were up $2 to $5/cwt at a closely watched auction in Oklahoma City on Monday, USDA data showed on Tuesday.
CME June lean hog futures climbed 0.725 cent to 74 cents/lb., rising in tandem with cattle. CME April hogs lost 0.675 cent to 62.65 cents as investors continued to liquidate holdings in April ahead of the contract’s expiration on April 19.
“It’s pretty hard to keep hogs down if you have cattle prices this strong,” Norcini said. “When you look at (higher) beef prices, pork is very cheap and guys are looking for a surge in pork demand.”
USDA after the close of futures trading said wholesale pork prices eased $1.53 to $75.17, led by a steep drop in pork belly prices.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, futures, hog futures, lean hogs, live cattle, USDA