Chicago | Reuters — U.S. cattle futures extended gains on Tuesday, with feeder cattle rising to their highest in 1-1/2 months as falling corn prices reduced costs for fattening the animals and enticed buying from investors, traders said.
Optimism that slaughter-weight cattle would fetch higher prices in U.S. Plains cash markets this week also buoyed futures. Gains in cattle came despite declines in many equities indices. Cattle often track moves in stock markets as reduced returns can force consumers to buy fewer luxury goods such as pricy steaks.
The U.S. Department of Agriculture after the closing of trading said wholesale beef prices were higher as retailers were buying meat to stock for grilling demand during the Labour Day holiday weekend in a month.
“The stock market getting crushed spurred some selling in cattle but overall it was a pretty solid finish,” said Craig VanDyke, analyst at brokerage Top Third Ag Marketing.
Chicago Mercantile Exchange October live cattle finished 0.5 cent higher at 114.575 cents/lb. after earlier hitting a one-month high of 115.05. CME August feeders settled up 0.925 cent at 145.475 cents/lb., after gaining on Monday by their daily price limit of 4.5 cents.
Chicago Board of Trade corn futures fell to a roughly two-year low. Lower prices for the main animal feed used to fatten cattle generally are seen as bullish for cattle prices, with feedlot operators sometimes more willing to pay up for cattle when it costs less to feed them.
Lean hog futures were mostly lower, reversing from gains earlier in the session and trimming the steep gains seen on Monday. Most-active CME October hogs finished 0.075 cent lower at 60.525 cents/lb., in the middle of their trading range for the session. The contract still was above its lifetime low of 58.775 cents reached on Friday, after drifting lower for much of July.
USDA in a midday report showed higher wholesale pork prices, including a $17.25 jump in pork belly values, prompting buying in futures, VanDyke said.
However, USDA after the close said the pork cutout was down $1.32, at $78.15/cwt, the lowest since April, while pork bellies fell $2.35, to $104.03.
“Volatility in the bellies has got the (hog) market riled up,” VanDyke said. “When it’s broken as hard as it has, any type of bullish news definitely has bears cautious… It’s very volatile action as the market is trying to find a bottom.”
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.