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U.S. livestock: Cattle, hog futures extend rally on packer demand

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. cattle and hog futures extended gains to fresh multi-month highs on Friday, buoyed by technical buying and strong demand from beef and pork packers, traders said.

Live cattle jumped more than one per cent at the Chicago Mercantile Exchange, capping their fifth consecutive week of higher prices. Lean hog futures surged nearly three per cent, notching their third straight weekly gain.

Higher cash cattle prices in the southern U.S. Plains on Wednesday boosted futures when trade resumed following Thursday’s halt for the U.S. Thanksgiving Day holiday. Packers bought cattle at prices ranging from $110 to $113, up from deals in the previous week of about $108 to $110.

“Sales on Wednesday were much better than expected in the (cash) cattle,” Allendale Inc analyst Rich Nelson said.

Front-month CME December cattle finished 1.075 cents higher at 110.75 cents/lb., increasing their weekly gain to 4.9 per cent. Most-active February cattle futures were up 1.4 cents, to 112.2 cents, highest since Aug. 22.

Futures trading volumes on Friday were thin in an abbreviated session following Thursday’s holiday, making prices more vulnerable to volatile swings.

Meat packers boosted their cattle and hog slaughters this week to take advantage of big profit margins and to meet holiday demand from retailers for the late-December holiday season.

The estimated slaughter of 551,000 cattle was above the same week last year of 458,000 head, and the hog slaughter of 2.152 million head was up from 2.110 head during the same week in 2015, according to the U.S. Department of Agriculture.

“Packer margins have narrowed significantly from their peak, but remain solidly positive,” advisory HedgersEdge said in a client note.

CME December lean hogs were up 1.3 cents to 51.05 cents/lb., highest since Sept. 14. The contract gained 6.8 per cent for the week.

CME January feeder cattle ended 2.325 cents higher at 127.225 cents/lb., gaining 1.8 per cent for the week.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.

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