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U.S. livestock: CME live cattle rally as stock market improves

CME hog futures again settle lower

CME
(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed sharply higher on Thursday, partly fueled by Wall Street’s recovery from session lows, traders said.

U.S. stocks edged higher in afternoon trading on Thursday, rebounding from earlier declines, as a flurry of positive economic reports eased fears about the potential impact of a weakening global economy on the U.S.

“We were following the outside markets. So, when they found a little bit of strength, it was just enough to cause the cattle market to focus on the tight supply fundamentals,” said U.S. Commodities analyst Don Roose.

CME live cattle garnered more support from short-covering, bargain hunting and futures’ discounts to slaughter-ready or cash cattle prices.

This week, the bulk of cash cattle in the U.S. Plains traded steady with last week at $164 per hundredweight (cwt), according to feedlot sources (all figures US$).

Packers recently reduced slaughter rates and raised wholesale beef prices to increase their margins and keep a lid on cash spending, a trader said.

The morning’s wholesale beef price setback might be a sign of grocer resistance to beef at current prices, he said.

The morning’s choice wholesale beef price fell $1.02/cwt from Wednesday to $249.47. Select slipped 12 cents to $235.32, the U.S. Department of Agriculture said.

Beef packer margins for Thursday were a negative $54.90 per head, compared with a negative $56.55 on Wednesday and a negative $38.85 a week earlier, according to Colorado-based analytics firm HedgersEdge.com.

December futures led the charge after breaking through the 20-day moving average of 163.7 cents, which triggered fund buying and buy stops.

October closed 2.3 cents/lb. higher at 165.25 cents, and December was up 2.825 cents to 165.3 cents.

Short-covering boosted CME feeder cattle, with some contracts settling up the maximum three cents per pound daily price limit.

Live cattle market advances and fund buying contributed to the upswing in feeder cattle futures.

October closed 2.8 cents/lb. higher at 240.2 cents. November and January ended at 237.15 and 231.125 cents, up three cents.

Hogs extend losses

CME hogs felt pressure from anticipation of lower cash and wholesale pork prices as supplies grow seasonally to heavier weights, traders said.

USDA’s Thursday morning direct cash hog prices were unavailable. Hogs in the Midwest sagged as much as $2/cwt, according to regional hog dealers.

Separate USDA data showed the morning’s wholesale pork price tumbled $3.26/cwt from Wednesday to $113.73, pressured by a $7.79 drop in ham costs.

“From a fundamental side, we’re getting more pork,” said Linn Group analyst John Ginzel.

December finished 1.6 cents/lb. lower at 90.325 cents, and February fell 2.75 cents to 86.45 cents.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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