Chicago | Reuters – Chicago Mercantile Exchange live cattle futures rallied to a fresh seven-year high on Monday, lifted by expectations for tightening supplies following a monthly U.S. Department of Agriculture (USDA) cattle supply report, traders said.
Several actively traded nearby contracts posted life-of-contract highs after the USDA’s cattle-on-feed report, released after the market closed on Friday, showed a smaller on-feed supply than a year ago, larger marketings and reduced placements.
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The figures were in line with trade estimates, but they indicated that the national herd was poised to shrink further following a drought-fueled liquidation of the breeding herd this year.
“The inventory number is at a cycle high so we can expect a declining cattle herd … The peak of the cattle herd now appears to be in based on USDA’s figures. We’ll confirm that in the January biannual numbers,” said Mike Zuzolo, president of Global Commodity Analytics.
Actively traded CME December live cattle LCZ2 ended 1.700 cent higher at 154.125 cents per lb after notching a contract high of 154.200 cents. October live cattle LCV2 hit the highest point for a spot contract LCc1 since July 2015 and ended 1.125 cent higher at 151.600 cents per lb.
CME November feeder cattle FCX2 ended 0.800 cent higher at 179.150 cents per lb.
Lean hog futures were mostly lower on Monday in a technical selling and profit-taking setback after reaching a two-month high on Friday on strong cash market values.
December hogs LHZ2 ended down 1.200 cent at 87.925 cents per lb.
The USDA’s cold storage report, released after the close on Monday, showed red meat supplies at the end of September were up 1 per cent from a month earlier and up 17 per cent from a year earlier.
However, surging U.S. bird flu cases and tightening poultry supplies likely muted the rise in red meat stocks, analysts said.
