U.S. livestock: Cattle, hogs gain in thin trading on demand optimism

CME February 2019 live cattle with 20-day moving average. (Barchart)

Chicago | Reuters — U.S. livestock futures were higher on Friday, with lean hogs rising sharply and cattle notching relatively smaller gains as each market was buoyed by hopes of better meat demand, traders said.

Hog futures on the Chicago Mercantile Exchange continued to rise on expectations that the spreading African swine fever virus in top hog producer China will force buyers to boost imports.

China officials on Friday said they were working to keep hog and pork supplies stable as farmers culled herds due to the highly virulent disease.

Even with China tariffs on imports of U.S. pork, increased shipments of the meat from Europe or South America could have ripple effects that would prompt demand for U.S. supplies.

U.S. Department of Agriculture data on Wednesday showed smaller year-on-year domestic pork supplies in cold storage, partially driven by increased exports.

“You have the underlying support from the African swine fever that just keeps getting worse,” said U.S. independent futures trader Dan Norcini.

“Cold storage was friendly to the market, if not outright bullish. We have record (hog) slaughter numbers but the demand for pork is pulling supplies down,” he added.

CME February lean hog futures settled up 1.65 cents at 67.825 cents/lb. (all figures US$).

The contract surged to a lifetime high on Tuesday before easing on Wednesday and then clawing back a portion of those declines on Friday.

CME February live cattle futures were up 0.175 cent to 120.925 cents/lb., a three-week high. January feeder cattle were up 0.75 cent to 149.375 cents.

Beef packers after the close of trading on Wednesday began bidding more aggressively to buy cattle in cash markets, ultimately paying about $116-$117/cwt, in sales that were higher than the previous week’s deals of mostly $113.

Wholesale beef prices have been relatively strong, bolstering profit margins for meat packers.

“Beef has been hanging in there. Maybe we have some demand kicking in. People will be sick of turkey, obviously,” Norcini said.

Trading volume was thin in an abbreviated session following Thursday’s U.S. Thanksgiving Day holiday when many Americans dine on turkey.

Stock indexes and crude oil were lower. Such “outside markets” often weigh on cattle as consumers often spend less on pricier dining options when financial markets falter.

“The good cash trade opened us up a little bit,” Top Third Ag Marketing analyst Craig VanDyke said of cattle. “That’s nice to see with outside markets being as heavy as they are.”

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


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