U.S. livestock: Live cattle futures rally before USDA report

(Photo courtesy Canada Beef Inc.)

Chicago / Reuters – Chicago Mercantile Exchange live cattle futures closed higher on Friday after short-covering and bargain hunting snapped a three-day losing streak, traders said.

August live cattle ended 2.425 cents per lb higher at 109.950 cents, and October closed 2.375 cents higher at 108.075 cents.

Investors were awaiting the U.S. Department of Agriculture’s monthly Cattle-On-Feed report on Friday at 2 p.m. CDT (1900 GMT).

USDA will simultaneously issue the monthly cold storage report, including total June beef and pork inventories. On average, a few analysts estimated last month’s total beef stocks at 428.3 million lbs and pork at 559.1 million lbs.

Futures were further supported by their discounts to this week’s cash prices, said traders and analysts.

“All you’re getting now is a response to the discounts being too great, and if you’re short the market you have to be a little worried,” said Oak Investment Group president Joe Ocrant.

This week market-ready, or cash, cattle in the southern U.S. Plains traded at $115 to $116 per cwt, down from $117 the week before, feedlot sources said.

Plentiful supplies of cattle kept a lid on beef cutout values but enhanced packer profits, said traders and analysts.

Average beef packer margins for Friday were a positive $25.30 per head, up from a positive $17.75 on Thursday, as calculated by HedgersEdge.com.

The morning’s choice beef price slipped 34 cents per cwt from Thursday to $200.36. Select cuts were up 14 cents to $189.96, the USDA said.

Short-covering and live cattle future’s rally pushed up CME feeder cattle contracts. August feeders closed 2.800 cents per lb higher at 137.200 cents.

Higher hog futures settlement

CME lean hogs ended their five-day slide, helped by short-covering and strength from neighboring cattle markets, traders said.

August hogs finished 0.825 cents per lb higher at 75.275 cents, and October ended 1.625 cents per lb higher at 63.900 cents.

Investors bought deferred months and simultaneously sold the August contract with the view that the market had already factored in early-week expectations for increased supplies ahead.

Futures gained despite conflicting market fundamentals.

USDA reported Friday morning’s average cash hog price in Iowa/Minnesota down 82 cents per cwt from Thursday to $71.80 in light sales volume.

Friday morning’s wholesale pork price was up 46 cents per cwt from Thursday to $89.37, the USDA said.

Packers are coping with sufficient inventories while supermarkets are buy product for immediate needs, an analyst said.

Editing by Tom Brown

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