U.S. livestock: Live cattle futures jump on tightening supplies

Lower wholesale pork values drag on hogs

CME December 2020 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures closed higher on Thursday on expectations that tight cattle supplies and rising demand for beef will buoy cash cattle markets, analysts said.

Cash cattle traded lightly in the southern Plains this week at $106/cwt, the U.S. Department of Agriculture reported, even with last week (all figures US$). But a drop in feedlot placements last spring, as the coronavirus outbreak hit slaughterhouse workers, should limit the flow of cattle into beef-packing plants for the next couple of months.

“The numbers on the cattle market are going to run under a year ago, as far as the kill, from now until mid-December,” said Don Roose, president of Iowa-based U.S. Commodities.

“It’s that combination, that the numbers are going to continue to contract … and the demand is solid,” Roose said of the strength in CME futures. He noted beef demand tends to rise this time of year as retailers fill meat cases in preparation for the holiday season.

Beef packer margins have cooled over the last month, but packers are still earning about $180 per head, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.

Chicago Mercantile Exchange December live cattle futures settled up 3.3 cents, or 3.2 per cent, at 107.975 cents/lb., the contract’s biggest single-day jump since May. CME January feeder cattle rose 1.4 cents to end at 131.350 cents/lb.

Boxed beef prices rose, with choice cuts up $1.53 at $207.32/cwt and select cuts up $1.65 at $191.23, according to USDA data.

CME hog futures fell for a third straight session, pressured by softening wholesale pork prices and lacklustre demand from China.

CME December lean hogs futures ended down 0.75 cent at 65.625 cents/lb.

USDA reported export sales of U.S. 2020 pork in the week ended Oct. 22 at 29,000 tonnes, but sales to China were underwhelming at 2,500 tonnes, the second-smallest tally since August.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.



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