Chicago | Reuters — U.S. live cattle futures rebounded on Tuesday, as packers kept processing at a higher-than-usual pace, despite a bearish Cattle on Feed report, traders said.
Meanwhile, hog futures eased slightly on Tuesday, as falling cutout prices have carved into packer margins, traders said.
CME December live cattle futures gained 0.65 cent to 104.05 cents/lb., while January feeder cattle added 1.65 cents to 128.425 cents/lb. (all figures US$).
Daily slaughter fell 3.3 per cent from last week, but is still 3.5 per cent ahead of the same week last year.
Packer margins continued to tighten from early COVID-19 pandemic-induced highs, but remained strong at $189.53 per head.
“It’s still a decent margin for packers,” said Matt Wiegand, a risk management consultant with FuturesOne.
Wiegand said that, after cattle futures dropped sharply on Monday, the trade will likely see contracts steadily climb for the rest of the week as packers move animals through their plants at such a steady clip.
“I wouldn’t expect a wild rally, but if we can build on the early week action, I think we see a short-term drift higher,” Wiegand said.
The U.S. Department of Agriculture’s monthly Cattle on Feed report Friday showed a 3.8 per cent gain in feedlots inventories on October 1, the highest since records began in 1996.
December lean hogs futures settled down 0.1 cent, to 67.65 cents/lb.
Though hog futures slipped on Tuesday, traders noted that the cash market for hogs remains strong, supporting the futures markets as they come off the highs seen in recent weeks.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.