U.S. livestock: Short-covering extends CME live cattle gains

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher for a second straight session on Friday, with gains fuelled by short-covering following deep market losses earlier in the week, traders said.

August live cattle ended 0.6 cent per pound higher at 150.6, and October was up 0.4 cent at 147.75 cents (all figures US$).

CME live cattle drew support from their price discounts to returns for market-ready, or cash, cattle, even though packers spent less for animals due to sufficient numbers of heavyweight cattle.

“Producers continued to feed cattle longer to heavier weights. So, those heavier animals backed up in a lot of places,” said Linn Group analyst John Ginzel.

This week cash cattle in the U.S. Plains moved at mostly $155 to $156 per hundredweight (cwt), down $4 to $5 from last week, feedlot sources said.

Also, prospects for a looming seasonal cattle supply increase, and slack wholesale beef demand after grocers buy all the product they need for Labour Day, pressured cash returns.

Friday afternoon’s choice wholesale beef price was at $255.54 per hundredweight (cwt), down $1.20 from Thursday. Select beef slipped 19 cents to $248.38, the U.S. Department of Agriculture said.

Traders bought the December contract and simultaneously sold October futures in a trading strategy known as bear spreading.

On Monday, market participants will wait for feedlots to tally the number of cattle for sale, while looking ahead to USDA’s monthly Cattle on Feed report, which will be issued on Friday (Aug. 22).

CME feeder cattle ended sharply higher, fuelled by fund buying and live cattle market advances.

August closed up 2.1 cents/lb. at 217.225 cents, and September ended at 215.1 cents, 2.05 cents higher.

Most hogs rise as shorts cover

CME hogs settled mostly higher supported by short-covering, but slumping cash and wholesale pork prices pressured the October contract, traders said.

October ended down 0.3 cent at 94.95 cents/lb. December finished 1.3 cents higher at 89.05 cents, and February up 0.75 cent at 87.35 cents.

The afternoon’s average price of hogs in Iowa/Minnesota slid $1.03/cwt from Thursday to $103.65, USDA said.

Separate government data showed the afternoon’s wholesale pork price stumbled $4.39 from Thursday to $111.80/cwt.

Packers are flush with heavy hogs after farmers aggressively moved animals to market as cash prices drifted downward, traders and analysts said.

The influx of heavyweight hogs made more pork available to grocers, they said.

Investors next week look to see whether the one-week slide in hog prices will persist, or if packers will pay up for supplies to pad inventories well ahead of the Labour Day holiday.

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

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