U.S. livestock: Cattle futures up on firm cash, export hopes

Lower supplies in cold storage support hogs

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

Chicago | Reuters — U.S. live and feeder cattle futures gained on Wednesday as strong export optimism supports production through the end of the year, traders said.

Chicago Mercantile Exchange December live cattle futures settled 0.5 cent higher at 107.875 cents/lb. (all figures US$).

Market-ready cattle traded in the cash market at $107/cwt, up $1 from the bulk of last week’s trade, the U.S. Department of Agriculture said.

CME feeder cattle futures gained 1.975 cents to end at 135.15 cents/lb., after reaching 135.475, the highest since Oct. 8.

“China has been buying more beef recently, on the weekly sales export reports. We assume a big chunk of that is going to get shipped before the Lunar New Year. That’s fourth quarter business,” said Alan Brugler, president of Brugler Marketing.

Back-month contracts rose as strength in U.S. stock markets fueled hopes about consumer demand for high-priced cuts of beef.

“It might be a little optimism about economic growth in 2021, and maybe that would translate to more beef demand, grilling demand for next summer,” said Brugler.

Wholesale beef prices continued to strengthen, with choice cuts up 75 cents at $210.19/cwt on Wednesday afternoon and select cuts up $1.60 at $197.05, according to USDA data.

Week-to-date cattle slaughter rates are ahead of pace, compared to last week and same time last year, with 359,000 cattle processed.

Lean hog futures also gained, with the most-active December contract ending 0.95 cent higher at 66.35 cents/lb.

Hog futures were supported by several months of lower cold storage stocks that are able to handle higher slaughter, despite a seasonal uptick in hogs.

“Everything we add to production is being absorbed, either by export or domestic consumption,” said Brugler.

Weekly hog slaughter is on pace with year ago levels, at 1.475 million slaughtered, up from last week.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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