U.S. livestock: Cash price optimism buoys CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle closed sharply higher on Tuesday, spurred by short-covering in anticipation of steady-to-better cash prices later this week, said traders.

Fund buying contributed to advances after some contracts topped technical resistance levels on their way to new highs.

October live cattle, which will expire on Oct. 31, finished 2.1 cents/lb. higher at 113.625 cents (all figures US$). Most actively traded December closed up 2.775 cents to 119.525 cents.

Both contracts ended above their respective 10-day moving average of 112.135 and 117.14 cents.

Market investors await the sale of market-ready, or cash, cattle that a week ago brought $110-$111/cwt. They look to Wednesday’s Fed Cattle Exchange sale of less than 1,000 animals for cash price direction.

Impressive packer profits and Tuesday’s higher wholesale beef prices are supportive cash price factors. And there are fewer cattle on this week’s show list, which reports the number of animals available for sale.

“This industry has been talking for six weeks that our show list size was going to grow, and it has not grown at all. It’s gotten a little bit smaller,” said KIS Futures vice-president Lane Broadbent.

The smaller show list and lighter cattle weights suggest feedlots are moving animals to market ahead of schedule, a move that could result in fewer cattle later which helped drive up deferred live cattle contracts.

Broadbent worries that some back-month contracts above 119 cents/lb. might encourage feedlots to feed cattle longer, thereby creating a glut of heavier animals.

Short-covering, technical buying and live cattle futures advances boosted CME feeder cattle to a three-month high.

October, which will expire on Thursday, ended 1.5 cents/lb. higher at 155.125 cents. Most actively-traded November closed 3.4 cents higher at 156.125 cents.

Hogs pare some Monday losses

Tuesday morning’s firmer cash and wholesale pork values sent CME lean hogs higher, reversing some of Monday’s declines, said traders.

Some speculative buyers bought deferred hog contracts, lifting them to new highs, in anticipation of fewer animals during that period.

December hogs finished up 0.5 cent/lb. to 64.025 cents, and February ended 0.425 cent higher at 68.65 cents.

Cash hog prices may be close to topping out after packers paid up for supplies for more than three weeks driven by their double-digit margins, good pork demand and an effort to maintain market share, a trader said.

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

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