CME feeder cattle futures rally as corn turns lower

Chicago Mercantile Exchange feeder cattle futures on Tuesday rebounded from Monday’s losses, supported by sentiment that lower corn prices would ease input costs for feedlot operators, analysts and traders said.

Chicago Board of Trade (CBOT) corn retreated on profit-taking following Monday’s spike, driven by hot, dry weather in the Plains that could hurt yields.

Spot August feeder cattle tracked CME’s feeder cattle index which was at US154.93 cents. The contract will expire on Aug. 29.

Spot August feeder closed at 154.725 cents, up 0.325 cent per pound. Most-actively traded September closed 1.15 cents higher at 155.275 cents (all figures US$).

Live cattle down with cash ideas

Live cattle futures at the CME slid in anticipation of lower cash prices, analysts and traders said.

There were no cash bids or asking prices reported by feedlot sources. Last Friday, cash cattle moved at mostly $123 per hundredweight (cwt) in Texas and Kansas, and $125 in Nebraska.

Ample cattle available for sale is expected to pressure cash cattle prices.

And U.S. packing plants will be closed on Monday for the Sept. 2 Labour Day holiday, further reducing their need for supplies.

Investors are monitoring sultry weather in the western U.S. Midwest that may slow animal weight gains and curtail the movement of livestock to market.

“Transporting cattle around in these kinds of temperatures is not very smart because of the risk of animal losses,” K+S Financials analyst Jack Salzsieder said.

High heat and humidity could also curb meat demand for grilling over the three-day holiday weekend.

USDA Tuesday morning reported the wholesale choice beef price, or cutout, at $196.23/cwt, up 43 cents from Monday. Select cuts rose $1, to $185.14.

Spot August live cattle ended down 0.45 cent to 122.95 cents/lb. Most-actively traded October closed 0.425 cent lower at 126.725 cents.

Hogs gain on pork price

CME hogs gained for a third straight session led by sharply higher wholesale pork prices, traders and analysts said.

Tuesday morning’s government data showed the wholesale pork price, or cutout, at $101.80/cwt. The cutout jumped $4.01 from Monday largely because of the $18.16 surge in prices for pork bellies, which are processed into bacon.

“We may have seen last-gasp pork buying by grocers and restaurants prior to the holiday,” a trader said.

He said pork belly prices may have declined enough to attract bacon processors and slicers for product use after the Labour Day holiday.

Investors bought futures despite lower cash hog prices as hog supplies increase seasonally. And packing plants are scheduled to be dark for the holiday on Monday.

Packers are believed to have all the hogs they need for the rest of this week’s production, but may raise cash bids after Labour Day to accommodate an expected big Saturday slaughter.

The government on Tuesday morning quoted the average hog price in the most-watched Iowa/Minnesota market $1.90/cwt lower from Monday at $88.10.

October futures are at a discount to CME’s hog index at 96.98 cents which encouraged buyers.

October hogs finished 0.55 cent higher at 86.575 cents/lb., while December ended up 0.475 cent at 83.55 cents.

— Theopolis Waters reports for Reuters from Chicago.

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