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U.S. livestock: Nearby CME live cattle close up three-cent limit

CME hogs mixed before USDA report

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle nearby trading months closed up the maximum three-cents-per-pound daily price limit, driven by short-covering and fund buying, traders said.

October and December finished at 158.45 and 162.1 cents/lb., respectively (all figures US$).

Deferred contracts may have drawn support from the outlook for tight supplies in the months ahead, said U.S. Commodities analyst Don Roose.

In a trading strategy known as bull spreads, investors bought October and sold back months motivated by the contract’s discount to last week’s prices for market-ready or cash cattle.

A few traders may have purchased October futures based on unconfirmed talk of higher cash cattle prices rather than anticipated steady to lower cash returns.

Packers are expected to curb cash spending by cutting kills to recoup lost margins and stimulate wholesale beef demand as grocers eye pork for National Pork Month in October.

Cash cattle bids in Kansas were $155 to $157 per hundredweight (cwt) against $161 to $162 asking prices, said feedlots sources. Last week, cash cattle sold at mostly $159 to $160.

Friday morning’s choice wholesale beef price dropped 92 cents/cwt from Thursday to $238.19. Select gained 10 cents to $225.44, USDA said.

Some feedlots may be faced with selling cattle that have gained weight after being held back due to cheaper feed and as leverage against recently low prices, a trader said.

CME feeder cattle futures hit an all-time high, and ended up the three-cents/lb. price limit, fueled by live cattle market buying and as corn prices drifted to a five-year low.

October and November feeder cattle respectively ended at 233.1 and 231.6 cents/lb.

Hogs close mixed

CME lean hogs finished mixed on positioning before the government’s quarterly hog report at 2 p.m. CT. [Related story]

Analysts expect the report to show impact from the deadly pig virus and potential herd expansion driven by high hog prices and low-cost feed.

October hogs closed up 0.2 cent/lb. to 106.525 cents, and December at 94.475 cents, 0.875 cent higher.

Investors bought the October contract following the pork cutout rebound pegged to higher costs for picnic shoulder cuts and pork bellies.

USDA data showed Friday morning’s wholesale pork price, or cutout, jumped $1.26/cwt from Thursday to $120.17.

Investors await prices for slaughter-ready hogs against the backdrop of profitable packer margins and decent pork demand versus a seasonal bump in supplies of heavyweight hogs.

The government’s Friday morning direct cash hog prices were unavailable. Hogs in the Midwest traded steady to up $1/cwt, according regional hog dealers.

Speculators sold back months with the view that cheaper corn may encourage producers to increase production.

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

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