U.S. cattle futures jump in pre-holiday trading

U.S. live cattle futures on Wednesday rose for a fifth straight session, driven by expectations for higher prices for cattle in the cash market, said traders and analysts.

The Chicago Mercantile Exchange (CME) will be closed on Thursday for the U.S. Thanksgiving Day holiday.

Packers in the southern U.S. Plains raised cash bids by $3 per hundredweight (cwt) to $126 as they look to buy cattle for next week, the first full slaughter week after the holiday (all figures US$).

Cattle sellers responded by raising their asking prices from $128 on Tuesday to about $130 Wednesday morning, said feedlot sources. Cash cattle a week ago moved at $125 to $126.

CME live cattle buyers were further encouraged by the recent strength in wholesale beef prices as grocers book product during the holiday-shortened week.

Also, some supermarkets may be preparing to feature items such as roasts as consumers tire of eating turkey after the Thanksgiving holiday, a trader said.

The wholesale price for choice beef on Wednesday morning was $194.63 per cwt, up 35 cents from Tuesday, and select cuts jumped $1.17 to $175.01, according to the U.S. Department of Agriculture.

December buying accelerated after it broke through the 100- and 200-day moving average resistance levels of 127.11 and 127.84 cents.

Fund buying also erupted in the February trading month when it surpassed the 100-day moving average of 130.58 cents.

Live cattle December closed 1.025 cents per pound higher, or 0.81 per cent, at 128.075 cents. February ended at 131.625 cents, 1.1 cents higher or 0.84 per cent.

The government issues its monthly cold storage report, which will include total beef and pork inventories, Wednesday at 2 p.m. CST.

Analysts on average expect the data to show total October beef stocks at about 420.3 million lbs., compared with 425.6 million in September and 417 million during October 2011.

CME feeder cattle moved higher, lifted by the strong live cattle market and technical buying.

January closed up 1.325 cents per lb., or 0.91 per cent, to 147.375 cents. March ended at 149.975 cents, up 1.5 cents or 1.01 per cent.

Most hogs drop late

Aside for December hog futures that drew support from higher cash hog and wholesale pork prices, other months bowed to late-session profit taking, said analysts and traders.

"People who were long didn’t want to leave any money the table with what could be extended holiday vacations for some," a trader said.

Late-day selling erased morning gains that pushed December to a seven-month top and February to a fresh contract high for a third day in a row at 88.25 cents in after-hours trading.

December hogs settled at 81.75 cents per lb., up 0.1 cent, or 0.12 per cent and February closed at 87.125 cents, down 0.575 cents or 0.66 per cent.

USDA Wednesday morning showed the average hog price in the most-watched Iowa/Minnesota market at $77.29/cwt, $1.82 higher.

The wholesale price for pork on Wednesday was up 43 cents/cwt to $81.70 led by ham values, said USDA.

"Their (packers) margins are still very sizeable and with processors needing to get hams ahead of the Christmas rush, they will want to make sure they have plenty of hogs around them to fill those orders," said independent hog futures trader Dan Norcini.

Packers are gearing up for an estimated post-holiday weekend hog slaughter well over 300,000 head and buying supplies for next week.

Analysts’ average forecast for pork inventories last month was 632.5 million lbs., compared with 630.7 million in September and 488.7 million a year earlier.

Pork storage is expected to be bearish for futures, but the impact could be minimal because the data is a month old, said Norcini. Also, traders are already anticipating large pork stocks for last month due to the seasonal buildup in slaughters, he said.

– Theopolis Waters writes for Reuters from Chicago.