LIVESTOCK: CME live cattle futures climb before USDA report

Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Friday, supported by positioning before the U.S. Department of Agriculture’s monthly Cattle-On-Feed report at 2 p.m. CDT (1900) GMT.

Analysts expect the report to show fewer cattle entered feedlots in July as expensive calves discouraged some feedyards from buying them.

On Friday, USDA will simultaneously issue the monthly cold storage report, which will include total July beef and pork inventories.

A few analysts estimated July total beef stocks at 339.0 million to 342.2 million lbs, and pork at 466.9 million to 512.5 million lbs.

Futures received an added boost from their discounts to cash prices.

Speculative buyers were encouraged by talk that some packers in Nebraska on Friday raised bids for unsold market-ready or cash cattle from $152 per hundredweight (cwt) to $155.

On Thursday, feedlots in Nebraska reported light cash cattle sales of $153, down $2 from a week ago. A small number of cattle in Kansas moved at $153, $1 higher than on Wednesday but $2 lower than last week.

Some packers bought enough cattle for delivery as much as two weeks away, while others could use animals for next week’s production, feedlot sources said.

Packers are hesitant to spend more for supplies given pushback by retailers against beef at current price levels, especially given competitively priced pork.

Friday morning’s choice wholesale beef price dipped 26 cents per cwt from Thursday at $250.20. Select dropped 75 cents to $240.07, the USDA said.

August live cattle ended 2.200 cents per lb higher at 151.850, and October at 147.000, up 1.450 cents.

CME feeder cattle drew support from higher live cattle futures.

August closed 0.900 cent per lb higher at 216.100 cents, and September up 1.475 at 210.900 cents.

Weak hogs settlement

CME hogs closed weak pressured by lower cash prices pegged to plentiful supplies of heavyweight hogs that have packers well stocked heading into Labor Day, traders said.

October closed 0.750 cent per lb lower at 92.875 cents, and December down 0.400 at 87.150 cents.

Friday morning’s average price of hogs in the eastern Midwest slumped $2.55 per cwt from Thursday to $94.22, the USDA said.

“We need to pull a little bit of weight off these hogs to get our averages down, which could possibly help cash down the road,” an Midwest hog dealer said.

Struggling cash prices pared early-session futures gains driven by short-covering and traders searching for market bottom.

Nearby trading months felt more pressure after traders sold them and simultaneously bought deferred contracts.

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