U.S. livestock: Cattle futures up on cash market optimism

Wholesale pork values support October hogs

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

Chicago | Reuters — U.S. live cattle futures closed firm on Monday, rallying after a sharply lower open as strong packer margins raised expectations for higher cash cattle trade this week, analysts said.

Average beef packer margins rose to $320.18 per head, from $313.25 on Friday, according to livestock marketing advisory service HedgersEdge.com (all figures US$).

“Cash cattle are probably up $1 (per hundredweight) this week, after being up $1-$2 last week … And we start to get into holiday buying again,” said Don Roose, president of Iowa-based U.S. Commodities, referring to Thanksgiving and Christmas.

Chicago Mercantile Exchange October live cattle settled up 0.375 cent at 107.95 cents/lb. and most-active December ended up 0.25 cent at 111.65 cents.

CME October feeder cattle settled up 0.6 cent at 140.925 cents/lb., and most-active November rose 0.95 to end at 141.1 cents.

Live cattle futures had tumbled at the open as traders responded to bearish feedlot data released by the U.S. Department of Agriculture after Friday’s close. USDA reported the number of U.S. cattle on feed as of Sept. 1 at 11.4 million head, or 104 per cent of a year earlier, topping market estimates for 103.3 per cent.

But futures rallied as traders shifted their focus to expectations for cash cattle and wholesale beef prices to rise.

“Strong domestic demand is giving us a little bit of help,” Roose said.

Cattle futures also drew support from a higher close on Wall Street, which some traders associate with improving consumer demand for high-priced cuts of beef.

CME lean hog futures closed mixed, with the nearby October contract supported by firmer wholesale pork prices.

CME October lean hog futures settled up 0.95 cent at 72.7 cents/lb., the while most-active December contract fell 0.4 cent to end at 64.025 cents, staying inside of Friday’s trading range.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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