U.S. livestock: Cattle futures slip as feed grain prices soar

Firm cash prices support CME hogs

CME November 2020 feeder cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures retreated on Wednesday after the December contract hit its highest price in more than a month, while feeder cattle futures slumped as prices surged for grain used as animal feed.

The rally in U.S. grain futures prices hung over cattle markets because livestock producers will be more reluctant to pay high prices for feeder cattle if they are facing steeper feed costs, analysts said.

“Their willingness to pay went down,” said Altin Kalo, agricultural economist for Steiner Consulting.

Most-active corn and wheat futures reached their highest prices since March at the Chicago Board of Trade after the U.S. Department of Agriculture reported that grain stocks were lower than traders expected.

Chicago Mercantile Exchange October live cattle settled down 0.35 cent at 108.55 cents/lb. (all figures US$). Most-active December live cattle ended 0.775 cents lower at 112.35 cents after reaching its highest since Aug. 20.

CME November feeder cattle finished 1.725 cents weaker at 142.05 cents/lb.

Positioning on the last day of the month helped to sway prices, Kalo said.

In the swine market, firm cash prices underpinned CME lean hog futures, traders said.

October lean hogs settled 0.425 cent higher at 72.8 cents/lb., while most-active December hogs jumped 1.125 cents to 63.1 cents.

The December hog contract is trading at a historically wide discount of more than 10 cents to the October contract, traders said.

Hog traders are waiting for USDA to issue weekly U.S. export sales data on Thursday.

They expect demand for U.S. pork exports to rise because China, South Korea and Japan banned German pork earlier this month after African swine fever, was found in wild boars in eastern Germany.

Germany’s agriculture ministry on Wednesday confirmed two more cases of the disease in wild boars, with one found outside the area of earlier discoveries.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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