U.S. livestock: Strong cash prices push CME live cattle higher

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts ended higher for a third day in a row on Friday, led by short-covering in response to better-than-expected prices for slaughter-ready, or cash, cattle, said traders.

They said fund buying contributed to CME live cattle gains after some contracts broke through technical resistance levels.

October live cattle ended 0.925 cent/lb. higher at 107.875 cents (all figures US$). December closed up 1.075 cents, to 108.05 cents, and topped the 20-day moving average of 107.21 cents.

Packers on Friday bought cash cattle in the U.S. Plains for $110/cwt that last week traded at mostly $105, said feedlot sources.

Extremely profitable packer margins and anticipated seasonal turnaround in wholesale beef demand as the fall approaches helped perk up cash prices, said traders and analysts.

Cash prices will likely head higher into October/November, said Cassandra Fish, author of industry blog The Beef. A rally back toward $120/cwt is not out of the question as long as supplies tighten during that same time frame and beef demand remains strong, she added.

Friday afternoon’s choice beef price slipped seven cents/cwt from Thursday, to $186.20. Select cuts were down 45 cents, to $178.38, the U.S. Department of Agriculture said.

Average beef packer margins for Friday were a positive $95.10 per head, up from a positive $83 on Thursday and up from a positive $59.50 a week ago, as calculated by HedgersEdge.com.

CME live cattle futures buying lifted the exchange’s feeder cattle contracts. September ended 1.525 cents/lb. higher at 135.5 cents.

Hog futures move higher

CME lean hogs benefited from spillover live cattle market support and futures’ discounts the exchange’s hog index for Sept. 14 at 63.59 cents, said traders.

They said weaker cash prices, due to ample supplies as cooler weather allows hogs to grow faster, capped gains in the nearby contracts.

October closed up 0.325 cent/lb., to 55.475 cents, and December ended 0.5 cent higher at 49.95 cents.

USDA estimated this week’s hog slaughter at 2.359 million head, 72,000 more than a year ago.

Friday afternoon’s average cash hog price in Iowa/Minnesota fell 68 cents/cwt from Thursday to $56.40, USDA said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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