U.S. livestock: Cattle extend gains on fund buying

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. cattle futures extended gains on Wednesday, with most live and feeder cattle contracts hitting lifetime highs on investment fund buying as wholesale beef prices also climbed, traders said.

The higher cattle prices came despite expectations for weaker trades this week in U.S. Plains cash cattle markets as some beef packers were likely to reduce slaughter rates in the days surrounding Sunday’s Easter holiday, curbing demand.

Most-active CME June live cattle settled 0.65 cent higher at 114.35 cents/lb., earlier hitting a life-of-contract high of 115.05 cents (all figures US$). The April contract was the only cattle contract that did not hit a lifetime high, ending up 0.95 cents at 124.2 cents, well below its contract high of 132.25 cents reached in late 2015.

Investors were betting that recent gains in equities markets could entice consumers to boost purchases of goods such as steaks and chops, according to U.S. Commodities analyst Don Roose. “Often, a strong economy equates with a strong cattle market,” he said.

All feeder cattle futures contracts hit new highs for the second straight session. CME May feeders topped out at 139.775 cents/lb., before finishing at 137.825 cents, up 0.5 cent.

The U.S. Department of Agriculture after the closing of futures trading said choice-grade wholesale beef was up 76 cents, to $210.13/cwt.

Wholesale pork prices were down 44 cents, to $74.73/cwt, USDA data showed.

Weaker pork price data at midday triggered lower prices in CME lean hog futures, with some contracts easing more than two per cent.

April hog futures, which expire next week, fell to the lowest levels Dec. 6. Most-active June hog futures settled down 1.725 cents, at 72.275 cents/lb., wiping out gains seen earlier this week.

U.S. hog production was up more than five per cent in the first quarter of the year, according to USDA data, and that larger supply has dragged on the market so far this month.

“The anticipation is that the supply is going to overwhelm the demand,” Roose said of hogs.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago.


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