U.S. feeder cattle futures hit highest in more than a year

Chicago Mercantile Exchange feeder cattle futures rose on Friday as forecasts for good crop weather pushed futures to their highest level since June 18, 2012, traders said.

The prospect of a record corn harvest in the fall extended CME feeder cattle gains for seventh straight week and a fifth month in a row.

Investors bought feeder cattle futures in the belief feedyards would buy more young cattle if feed costs continue to decline.

September feeder cattle closed at 156.925 cents, up 0.7 cent per pound. October finished at 158.95 cents, 0.95 cent higher (all figures US$).

Mixed, choppy cattle futures

CME live cattle settled mixed after a choppy session. Investors adjusted positions on the final trading day of the month and before the Sept. 2 Labour Day holiday.

Spot-August live cattle, which expired at noon CT, settled 0.85 cent/lb. lower at 122.7 cents. It fell below the 20-day moving average level of 123.05 cents as sellers outnumbered buyers.

October, the new lead contract, closed at 126.8 cents, down 0.175 cent, while December ended up 0.225 cent to 130.475 cents.

October felt pressure from its premium to Friday’s cash cattle prices, analysts and traders said.

Cash cattle in Texas and Kansas fetched $123 per hundredweight (cwt) which was steady with last week, feedlot sources said.

Packers kept a lid on cash values with plants scheduled to be closed on Monday for Labour Day.

Analysts and trader said the prospect of a seasonal uptrend in cash prices underpinned December live cattle futures.

Hogs up with futures’ discount

CME hogs’ discount to the exchange’s hog index, which was at 94.2 cents, encouraged futures buyers, analysts and traders said.

Hog futures were up nearly three per cent for the week on fund buying, but fell 10 per cent for the month as cash hog prices turned mostly lower.

October closed at 87.625 cents/lb., up 0.3 cent. December finished 0.45 cent higher at 84.75 cents.

The U.S. Department of Agriculture on Friday afternoon quoted the average hog price in the Iowa/Minnesota market $1.07/cwt higher than Thursday at $88.34, but down 25 cents to $86.10 in the eastern Midwest.

Some packers raised cash hog bids to cover production after Labour Day, including an expected big Saturday slaughter, traders and analysts said.

Other processors have all the hogs they need given the seasonal increase in supplies.

Investors wait to gauge meat demand from grocers following the long holiday weekend, which marks the end of the summer grilling season.

USDA Friday afternoon showed the wholesale pork price at $94.96/cwt, $2.07 lower than Thursday. The price decline was led by the $6.52/cwt drop in rib values, a staple at backyard cookouts.

— Theopolis Waters reports for Reuters from Chicago.

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