Chicago | Reuters — The bulk of Chicago Mercantile Exchange live cattle contracts closed lower on Friday, pressured by the morning’s bearish U.S. Department of Agriculture (USDA) monthly Cattle on Feed report, said traders.
USDA’s data showed more cattle than expected entered feedlots in November than a year ago, which analysts attributed to low-cost feed and continued drought in parts of the U.S. northern Plains.
Technical selling further pressured deferred live cattle contracts. Friday’s firmer wholesale beef values and this week’s cash prices underpinned December futures.
December live cattle finished up 0.2 cent/lb. to 119.825 cents (all figures US$). February ended 1.1 cents lower at 118.575 cents, and below the 10-day moving average of 119.383 cents.
This week slaughter-ready, or cash, cattle in the U.S. Plains traded from $119 to $120/cwt versus $118-$120 last week.
Tight supplies in parts of the Plains, and grocers buying beef to avoid potential shortages when plants close during the Christmas holiday, supported cash prices, said analysts and traders.
Friday morning’s USDA monthly cold storage report showed November total beef stocks at 487 million lbs., down four per cent from October and down eight per cent from a year earlier.
The month-over-month November beef stock decline confirms industry talk that grocers heavily advertised beef last month, said Allendale Inc. chief strategist Rich Nelson.
CME feeder cattle fell on live cattle futures losses and USDA’s bearish cattle report.
November feeder cattle closed 1.375 cents/lb. lower at 141.55 cents.
Hog futures close higher
CME lean hogs surged on fund buying and Friday’s USDA bullish monthly cold storage pork stocks result, which offset the morning’s USDA neutral-to-mildly bearish quarterly hog report, said traders.
February closed 1.4 cents higher at 69.975 cents, and April finished 1.7 cents higher at 74.775 cents.
Both contracts settled above their respective 40-day moving average of 69.397 and 73.462 cents.
The U.S. government’s hog report showed further herd growth mainly driven by the abundance of cheap feed, said analysts.
November pork stocks totaled 505 million lbs., down 16 per cent from the previous month, said USDA.
“Only two words, cheap feed,” Nelson cited as a reason behind the prior quarter’s U.S. hog herd expansion.
U.S. Commodities president Don Roose attributed hog future’s advances on Friday to November’s pork inventory shortfall that implies increased demand is absorbing the large U.S. hog supply.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.