U.S. livestock: CME live cattle rebound with beef prices

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday erased Tuesday’s losses, aided by short-covering and the upswing in wholesale beef prices, traders said.

October closed up 1.5 cents, to 168.05 cents per pound, and December was 1.05 cents higher at 168.1 cents/lb. (all figures US$).

Wednesday morning’s choice wholesale beef price rose 92 cents to $250.76 per hundredweight (cwt) from Tuesday. Select climbed 72 cents to $235.65/cwt, the U.S. Department of Agriculture said.

Packers raised wholesale beef costs to shore up their slumping margins and offset possibly higher market-ready or cash cattle prices this week, traders and analysts said.

Last week, the bulk of cash cattle in the U.S. Plains moved at $164/cwt.

USDA will issue the monthly cold storage report on Wednesday at 2 p.m. CT, which will include total September beef and pork inventories.

A few analysts forecast an average September inventory total of 343.3 million lbs. for beef and 560.1 million lbs. for pork.

The government’s monthly Cattle-On-Feed report is at 2 p.m. CT on Friday. Most analysts expect Friday’s data to show increased placements of cattle in U.S. feedlots last month versus a year ago.

CME feeder cattle contracts drew support from short-covering, fund buying and live cattle futures’ gains.

October closed up 0.5 cent to 239.45 cents/lb., and November 1.25 cents higher at 235.175 cents.

Hogs close higher

Bargain hunters and speculators searching for a market bottom boosted CME hogs in the face of sustained bearish fundamentals, traders said.

Futures’ discount to CME’s hog index at 105.45 cents, encouraged buyers.

December finished 1.3 cent higher at 89.75 cents/lb., and February was up 1.775 cents to 87.85 cents/lb.

The morning’s average hog price in the eastern Midwest region was down $1.16 cents/cwt from Tuesday to $94.31, according to USDA.

Separate government data showed Wednesday morning’s wholesale pork price fell $2.71 to $101.33/cwt from Tuesday, mainly due to lower ham and loin values.

Packers are not actively bidding up for hogs whose numbers, and weights, have grown seasonally while increasing pork tonnage.

On Wednesday, packers processed 429,000 hogs, up 1,000 from last week and 4,000 more than a year ago, based on USDA data.

“Maybe people got too short… but we know the cash market is going to grind lower. Any rally is short-lived until something really big comes out,” said JBS Trading president James Burns.

Deep-deferred hog contracts led advances in anticipation of possibly tight hog supplies during that period as U.S. and Canadian farmers continue to cope with the porcine epidemic diarrhea virus.

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

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