U.S. livestock: Strong cash market supports CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled higher on Thursday in light pre-holiday volume, gaining on follow-through buying a day after cash market prices touched highs, traders said.

Cash cattle in the U.S. Plains traded mostly at $158 per hundredweight (cwt) on Wednesday, $3 higher than the previous week (all figures US$). Strong demand for U.S. beef and tight cattle supplies have supported higher prices for cattle in the cash market.

Short-covering also lent support to the CME live cattle futures, said Craig Turner, commodities broker at Daniels Trading.

“You may not want to be short heading into the long weekend,” Turner said.

Rising wholesale beef prices continued to be a strong indicator of increasing demand for beef.

Thursday morning’s wholesale price for choice beef was at $248.65/cwt, up 99 cents from Wednesday. Select beef cuts were at $241.25/cwt, up $1.13, according to U.S. Department of Agriculture data.

Tropical Storm Arthur, heading for the U.S. East Coast, was monitored by investors as the storm could likely dampen demand for holiday meat purchases and consumption.

CME livestock markets closed at noon CT on Thursday for the U.S. July 4 holiday.

August live cattle finished up 2.675 cents per pound at 155 cents, and October was up 1.225 cents at 156.9 cents.

CME feeder cattle followed live cattle higher. Traders await the results of the government’s crop supply and demand report to be released on Friday next week.

The monthly report could indirectly impact feeder cattle prices as the U.S. corn crop is projected to be a bumper crop this autumn, traders said.

August closed up 1.425 cents/lb. at 217.625, and September 1.275 cents higher at 218.825 cents.

Hog futures close higher

CME July and August hogs finished higher, supported by the expectation of higher prices in the cash market next week.

Most packers planned to be closed on Friday and Saturday for the holiday, but cash hog dealers said several will need hogs for next week.

“I hear packers are going to be bidding strong for cash hogs next week. They raised the bids yesterday out of concern for next week, so I’m looking for continued strength in the cash hog market,” said Dennis Smith, a broker at Archer Financial Service.

The expectation of higher cash hog prices combined with slightly higher wholesale pork values boosted July and August futures.

Government data showed the wholesale pork price on Thursday morning at $133.74/cwt, up 57 cents from Wednesday.

Front month July’s gains were limited by its premium to the exchange’s hog index at 128.17, traders said.

July hogs closed 0.925 cent/lb. higher at 131.725, and August closed up 1.25 cents at 131.6 cents. October also finished up 1.65 cents at 116.75 cents.

— Meredith Davis reports on agriculture and livestock futures markets for Reuters from Chicago.

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