U.S. livestock: Live cattle step back after eight-session climb

Hog sector seen having 'curbed expansion'

CME October 2020 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures pulled back on Monday in profit taking ahead of the U.S. Department of Agriculture’s Cattle on Feed report at the end of the week, traders said.

Live cattle fell for the first day after eight sessions of gains. The pullback reflects uncertainty about the USDA findings on Friday, said Matthew Wiegand, risk management consultant at FuturesOne.

“We’ve still been running a little bit behind the year-ago pace on packer runs. There’s maybe a little residual concern until we see that number at the end of the week,” he said.

Beef slaughter rates climbed to 117,000 head on Monday, up 3.5 per cent from a week ago and 1.7 per cent more than a year ago.

Meanwhile, beef packer margins climbed Monday to $265.55 per head, the highest since July 14, according to Denver-based livestock marketing advisory service HedgersEdge.com (all figures US$).

Choice cuts of boxed beef climbed $2.17, to $216.41/cwt, while select cuts increased by $2.01, to $201.30/cwt, according to the U.S. Department of Agriculture.

Wiegand said the live market still has upside potential, as packers show signs they need more cattle.

“They should have incentive to get out there and keep bidding to pull cattle forward a little bit for their uncovered need,” he said.

CME October live cattle fell 0.35 cent to settle at 109.875 cents/lb. September feeder cattle slipped 2.175 cents, to 144.4 cents/lb.

In the pork market, CME October lean hogs settled 0.5 cent higher at 53.525 cents/lb.

Daily hog slaughter also increased to 480,000 head, up five per cent compared to a week ago and slightly more than a year ago. Wiegand said near-term, herd size will likely be reduced, which could be supportive.

“We’ve curbed expansion,” he said. “If we can keep demand up, that moves cash prices of ready hogs.”

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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