U.S. livestock: Bargain buying rallies CME live cattle, hogs

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday posted their biggest daily gain in a month, fueled by short-covering and bargain buying after recent market losses, traders said.

October live cattle ended 2.4 cents/lb. higher at 102.425 cents, and December up 2.275 cents at 104.2 cents (all figures US$).

Investors may be anticipating a summer seasonal bottom in cattle prices that typically move higher heading into the fall when meat demand tends to pick up, said AgriVisor Services analyst Dale Durchholz.

Until then, wholesale beef prices could struggle as consumers transition from grilling cuts to items more favourable for cooking indoors, he said.

Wednesday morning’s choice beef price jumped $1.60/cwt from Tuesday, to $191.88. Select cuts slumped $2.19, to $184.34, according to the U.S. Department of Agriculture.

Last week, packers in the U.S. Plains paid mostly $110-$111 for market-ready, or cash, cattle that were down $4-$5 from the week before.

Investors look for even lower cash prices later this week based on current futures values and talk of softer prices at smaller cattle auctions in the Plains.

Thursday will begin the first of five days for some funds trading in CME’s livestock markets to shift or “roll” October positions mainly into December. The process is tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Short-covering and live cattle futures’ turnaround boosted CME feeder cattle contracts. September ended 2.65 cents/lb. higher at 133.15 cents.

Hogs finish higher

CME lean hogs gained more than three per cent, on bargain hunting and spillover support from the steep climb in live cattle markets, said traders.

October closed 1.95 cents/lb. higher at 60.875 cents, and December ended 1.2 cents higher at 55.375 cents.

Some speculative buying developed with the view that retailers and restaurants will “push” pork for National Pork Month in October, said Durchholz.

Bullish investors were encouraged by the recent rise in wholesale pork values, even though ample supplies weakened cash hog prices.

Smithfield Foods’ Monmouth, Illinois hog plant that was idled by fire on Monday may not resume normal operations until Thursday or Friday, according to Midwest hog merchants.

They said delivery of some hogs purchased by the company before the fire will be delayed, while others may be sent to other Smithfield-owned packing plants.

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

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