U.S. livestock: Short-covering pares recent CME live cattle losses

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday settled higher after short-covering helped recoup some of the market’s recent cash price related losses, traders said.

A few investors adjusted positions before the U.S. Department of Agriculture’s monthly Cattle on Feed report on Friday.

December live cattle finished 0.7 cent/lb. higher at 120.2 cents, and February ended up 0.6 cent, to 125.75 cents (all figures US$).

Wednesday morning’s Fed Cattle Exchange resulted in $119-$119.25/cwt sales versus $124 there last week.

Some packers in the U.S. Plains responded by paying $119/cwt for slaughter-ready, or cash, cattle. That was down as much as $6 from the week before.

Wednesday’s market gains were an adjustment to selling in recent weeks that brought futures down from a high of 127.875 cents/lb. on Nov. 2, fueled by higher prices at that time, a trader said.

“It’s just two steps down and one up as we hit a little bit of support today,” said U.S. Commodities analyst Don Roose.

Cash prices will in part depend on beef demand during the year-end holidays when turkey and ham are heavily promoted, he said.

Processors are also less inclined to pay more for cattle given their slipping margins and the Thanksgiving holiday-shortened workweek.

Short-covering, technical buying and live cattle futures advances lifted CME feeder cattle.

November feeder cattle closed up 0.375 cent/lb., to 158 cents.

Mostly soft hog futures close

CME lean hogs ended mostly weak. Some investors sold deferred months and bought December, partly because of its discount to the exchange’s hog index for Dec. 13 at 66.68 cents.

Wednesday’s lower cash and wholesale pork prices further weighed on deferred contracts, traders said.

December hogs ended 1.15 cents/lb. higher at 61.125 cents. February closed down 0.05 cent, to 67.45 cents, and April finished 0.8 cent lower at 71.625 cents.

Cash prices were pressured for a fourth straight session because of packers competing less for hogs as plants prepare to shutdown over the upcoming holiday, analysts and traders said.

They said retailers are buying less pork after nearly filling Thanksgiving and Christmas ham orders.

“Grocery purchases of ham and turkey are pretty much done. Now the question is how much of it will consumers buy,” Roose said.

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

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