U.S. live, feeder cattle gain on USDA report

U.S. live and feeder cattle futures closed higher on Monday, lifted by the government’s monthly cattle-on-feed report last Friday that showed fewer-than-expected cattle placed into feedlots last month, analysts and traders said.

The number of cattle driven into U.S. feedyards in July for fattening fell 10 per cent from a year ago due to low cattle prices and rising feed costs, according to analysts and the U.S. Department of Agriculture.

Chicago Mercantile Exchange (CME) hogs closed steady to weak.

Live cattle at the CME traded above board for most of the morning, and the fifth time in the last six sessions, as investors digested Friday’s USDA cattle report findings.

Spot August closed up 0.275 cents per pound to 121.35 cents. Most-actively traded October ended at 125.475 cents, up 0.2 cent (all figures US$).

October support appears to be more chart-based while deferred months reflect reduced supplies moving forward for beef, said Sterling Smith, futures specialist with Citigroup Global Markets.

Futures got added lift from packers who on Friday paid $120 to $121 per hundredweight for cash cattle last week, $1-$2 per higher than the week before, amid tight supplies.

Processors also raised bids for cattle based on solid demand for beef from supermarkets preparing for Labour Day meat specials — but the recent decline in sales volume suggests grocers are buying less product as the holiday approaches.

Monday’s wholesale choice beef price was pegged at $193.85 per cwt, 82 cents higher than Friday. Sales volume was only 109 carloads, compared with a recent high of 275 on Aug. 8.

CME feeder cattle posted gains along with the firmer live cattle market and Friday’s mildly bullish USDA cattle report.

Feeder cattle futures ignored Monday’s surge in corn prices that could reduce feedyard demand for younger cattle.

Spot August feeder cattle closed up 0.125 cent per lb to 140.55 cents. September finished at 142.8 cents, up 0.6 cent.

Hogs steady to weak

CME hogs closed steady to weak after cooler weather and costly feed created a buildup in supplies, lessening packer need for hogs, said traders.

October hogs closed down 0.3 cent/lb. to 75.9 cents and December ended unchanged at 73.6 cents. February ended at 81.1 cents, down 0.1 cent.

Producers in recent weeks rushed hogs to market after widespread drought in the U.S. Plains drove feed prices for livestock to record highs, a trader said. And moderating temperatures allow hogs to pick up weight quicker, causing hog growers to send animals to market sooner than they would have otherwise, he said.

USDA estimated the average hog price in the closely watched Iowa/southern Minnesota market at $84.54/cwt, 70 cents lower than on Friday.

The government estimated Monday’s slaughter at 424,000 head, up 8,000 from last week and 4,000 more than a year ago.

— Theopolis Waters writes for Reuters from Chicago.

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