U.S. livestock: Cattle extend gains on technical buying

Chicago | Reuters — U.S. live and feeder cattle futures climbed more than one per cent on Monday, adding to gains in the previous session, on technical buying and expectations cattle and beef prices will rise seasonally, traders and analysts said.

Chicago Mercantile Exchange lean hog futures fell sharply. Friday’s expiration of October hogs left December futures as the front-month contract and it was trading at the lowest levels for a lead month since 2002.

Both cattle and hogs have been under pressure for months by bigger U.S. herds and abundant meat supplies, with cattle futures benefiting from technically oversold conditions after reaching six-year lows last week.

“The cattle market is once again searching for a bottom. We’ve been in an extended downtrend for two years, and the markets have to come up for air,” said Cassandra Fish, an analyst and author of blog The Beef.

CME December live cattle futures gained 1.55 cents, to 99 cents/lb., while CME November feeder cattle finished 1.575 cents higher at 117.225 cents/lb. (all figures US$).

Cash cattle markets have been trending lower with futures and traders waiting to see if slaughter-weight steers and heifers would attract higher prices than the mostly $98/cwt fetched last week in the southern U.S. Plains.

More than 13,000 head of cattle were expected to be offered this week on the online Fed Cattle Exchange scheduled for Wednesday, according to the auction website, and price direction on the online auction could impact futures.

Additionally, beef prices typically begin rising around this time of year as retailers start stocking meat coolers for the holidays. More demand from retailers could force some packers to pay higher prices to feedlots, boosting futures.

The U.S. Department of Agriculture showed choice-grade beef and wholesale pork prices each slightly higher in data released after the close of futures trading.

Fish said hog supplies were likely to continue expanding. “Everybody knows we are heading into increased supply. November hog kills are historic for being the largest of the year, and this year is no exception.”

December lean hogs settled 0.625 cent lower at 41.6 cents/lb., just above their life-of-contract low of 41.1 reached on Oct. 5.

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

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