U.S. livestock: CME live cattle snap back from nine-month low

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle settled higher on Thursday after short-covering and bargain buying rescued futures from a nine-month low earlier in the session, said traders.

Technical buying and positioning before the U.S. Department of Agriculture’s monthly Cattle on Feed report on Friday provided more market support.

August, which will expire Aug. 31, ended up 0.3 cent/lb. to 105.95 cents (all figures US$). Most actively-traded October finished 0.65 cent higher at 106.825 cents.

“Futures rallied but peeled back from highs because no one wants to get far ahead of Friday’s report that could show bigger cattle numbers down the road,” a trader said.

Investors await remaining slaughter-ready, or cash, cattle sales in the U.S. Plains that so far this week brought $106-$107/cwt. Last week those cattle fetched $109-$110.

Plentiful cattle supplies further dragged down wholesale beef values, which tend to peak soon after Labour Day — the summer’s final grilling holiday, said traders and analysts.

“There’s enough beef, pork and chicken out there for supermarkets to choose from. Pretty soon, talk will turn to ham and turkey for the year-end holidays,” another trader said.

Short-covering, live cattle futures turnaround and technical buying lifted most CME feeder cattle contracts from morning lows.

August feeders, which will expire on Aug. 31, closed down 0.025 cent/lb. to 141.6 cents. Most actively-traded September closed up 0.275 cent, to 142.175 cents, and October finished 0.7 cent higher at 142.4 cents.

Hogs up from four-month low

CME lean hogs settled moderately higher on buy stops and bargain buying, but not before initially sinking to a four-month low as burdensome supplies continued to undercut cash prices, said traders.

Nonetheless bullish investors were drawn to futures that remained undervalued compared with the exchange’s hog index for Aug. 22 at 80.49 cents.

October ended up 0.225 cent/lb. to 63.775 cents, and December finished 0.4 cent higher at 59.25 cents.

The seasonal supply bump, and packers needing fewer animals going into Labour Day plant closures, points to mostly weaker cash prices in the near term, a trader said.

Almost fall-like weather in the Midwest is causing hogs to grow sooner than expected — making them more accessible to processors at less money, said traders and analysts.

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

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