Chicago | Reuters — Chicago Mercantile Exchange live cattle futures bounced on Thursday on technical buying and short-covering following three days of steep declines that had sliced prices by more than five per cent, traders said.
Optimism that a deal on a revamped North American Free Trade Agreement (NAFTA) could be reached by the end of the month gave livestock markets underlying support. But traders remained cautious amid ongoing trade talks between the U.S. and China in Washington this week.
CME June live cattle ended up 1.225 cents at 103.05 cents/lb. (all figures US$). Actively traded CME August live cattle futures added 0.05 cent at 99.1 cents/lb. after earlier touching its lowest level since April 4.
Ample cattle supplies and weakening cash cattle prices at U.S. Plains feedlot markets have dragged down futures this week, although nearby contracts remain at a large discount to cash prices, which was limiting further futures declines.
Some U.S. Plains fed cattle have already traded from $112 to $118/cwt this week, well below last week’s sales of mostly $122/cwt, traders said.
“The futures have already built in a lot of the weakness in cash prices going forward and the (futures) market is technically oversold,” said Doug Houghton, analyst with Brock Associates Inc.
Although a beef price rally appeared to be reaching a top early this week, choice wholesale beef prices edged higher on Thursday, suggesting strong demand.
Beef packer margins also continued to climb, reaching as estimated $181.95 per head on Thursday, up from $139.95 a week ago, according to livestock marketing advisory service HedgersEdge.com.
Feeder cattle futures rose along with live cattle. The actively-traded August contract ended two cents higher at 138.725 cents/lb.
Lean hog futures advanced on firm cash markets and good pork demand, including for export.
The U.S. Department of Agriculture pegged net pork export sales last week at nearly 22,000 tons, up about 12 per cent from the previous four-week average.
CME June hogs gained 0.575 cent to 76.475 cents/lb. while July hogs ended 0.525 cent higher at 78.2 cents.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago.Tagged cash cattle, cattle futures, China, closing markets, CME, feeder cattle, feedlot, hog futures, lean hog, live cattle, NAFTA