Chicago | Reuters—Chicago Mercantile Exchange live and feeder cattle futures rallied to fresh contract highs on Wednesday, as tight supplies and strong cash market prices continued to send future contracts surging, market analysts said.
Meanwhile, CME hog futures rebounded off Tuesday’s dip, as USDA data showed wholesale carcass prices steadied and wholesale belly prices firmed. And news that China will reduce the number of breeding sows and curb new production capacity was friendly for Chicago hog futures, said Dan Norcini, an independent livestock trader.
Any Chinese inventory shortfalls might be offset by increased imports, which could be a boon for U.S. producers, Norcini said.
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U.S. livestock: Cattle futures fall back ahead of cattle on feed report
Chicago live and feeder cattle futures fell back on Thursday ahead of Friday’s cattle on feed report. Hogs were mixed.
CME August lean hog futures LHQ25 ended up 0.725 cent at 108.475 cents per pound, while most-active October LHV25 ended up 0.400 cent at 90.900 cents per pound.
Futures and prices in cash markets across the U.S. have spiked as cattle inventories have dwindled to their lowest levels in decades.
The cattle slaughter pace has slowed, government data showed, as packer margins remain in the negative. And cattle supplies further tightened earlier this month, when the U.S. Department of Agriculture has again halted imports of Mexican cattle into the United States due to the spread of the damaging livestock pest New World screwworm in Mexico.
“The reality right now is if you want replacement calves? You’re going to have to pay up for them,” Norcini said.
Cattle traders said they’re awaiting a monthly U.S. Department of Agriculture (USDA) report on Friday, which analysts expect to show 0.8 per cent fewer cattle in U.S. feedlots compared to a year ago.
Analysts surveyed by Reuters on average also estimated feedlot placements in June at 98 per cent of a year ago and June cattle marketings at 96.4 per cent of a year ago.
CME August live cattle futures LCQ25 settled up 2.050 cents at 227.025 cents per pound on Wednesday, while most-active October live cattle futures LCV25 ended up 2.375 cents at 223.500 cents per pound.
CME August feeder cattle futures FCQ25 ended 3.250 cents higher at 331.525 cents per pound.
