U.S. livestock: Live cattle surge on cash optimism, technical buying

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures notched their biggest gains in 11 months on Wednesday, boosted by optimism for higher cash cattle prices and technical buying, traders and analysts said.

Higher cattle sales at a weekly online auction helped to trigger the rally. Feeder cattle and lean hog futures also were mostly higher.

Front-month October live cattle jumped by their daily price limit of three cents before settling up 2.975 cents higher at 110.95 cents/lb., highest since Aug. 8. The percentage gains of 2.8 were the largest since Oct. 20, 2016.

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“The Fed Cattle Exchange hasn’t been too big of a focus lately but today it did trade some volume — that was the catalyst,” said U.S. Commodities president Don Roose.

Out of 1,450 cattle on offer at the online auction, 636 head sold for an average price of $106.67/cwt, according to the auction website. That is up from last week’s sales of 128 head at $104.75/cwt.

The higher prices suggested beef packers would likely pay higher prices in negotiated trades with feedlots later this week. Cash sales last week in the Plains were mostly $105-$106/cwt.

Traders also were squaring positions ahead of the U.S. Department of Agriculture’s monthly Cattle on Feed and Cold Storage reports, both due on Friday.

Analysts polled by Reuters expected USDA to show cattle placed in feedlots for fattening in August down 2.9 per cent from last year — portending fewer animals reaching slaughter weight in February and March.

CME October feeder cattle finished up 4.475 cents at 157.275 cents/lb., after earlier rising by their daily price limit of 4.5 cents.

CME October lean hog futures plunged 1.475 cents, to 58.65 cents/lb., as investors continued to roll out of the front-month contract amid declining cash prices in the Midwest. But most other contracts gained, with December hogs edging up 0.2 cent, to 59.925 cents, highest since Sept. 6.

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

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