U.S. livestock: CME live cattle limit up on fund buying

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Thursday touched a three-month top, spurred by short-covering and fund buying, said traders.

April closed up its three-cent-per-pound daily price limit (all figures US$). Investors bought that contract and simultaneously sold February. The limit will expand to 4.5 cents on Friday.

February live cattle closed 2.575 cents per pound higher at 126.425 cents. April settled three cents higher at 125.925 cents, and above the 10-day moving average of 124.19 cents.

Some traders attributed the futures gains to Wednesday’s mildly bullish U.S. Department of Agriculture semi-annual cattle inventory report that showed slower herd expansion.

Others argued that the Wednesday report confirmed last Friday’s USDA monthly cattle survey’s implication for increased front-end cattle supplies, and fewer animals later, as drought shrivels winter grazing pastures.

“We’re slowing down expansion, but there are bigger numbers coming,” said Oklahoma State University economist Derrell Peel following Wednesday’s report.

With this week’s cash cattle sales nearly completed, investors await next week’s trade against the backdrop of plunging temperatures in the U.S. Plains. Frigid weather tends to slow cattle gains, making them less available to packers when needed.

Packers this week paid $125-$126/cwt for slaughter-ready, or cash, cattle versus mostly $127 last week.

On Thursday, USDA’s export sales data showed U.S. beef for the week ended Jan. 25 totaled 25,200 tonnes in the current marketing year versus 28,100 tonnes in the previous week.

CME feeder cattle ended higher led by stronger live cattle futures and tighter feeder cattle supply outlook. March settled up its 4.5-cent price limit, which will be expanded to 6.75 cents on Friday; March feeders ended up at 149.55 cents.

Hogs finish strong

CME hogs closed higher with support from live cattle futures’ advances and pork packer competition for supplies, said traders.

Snow and single-digit temperatures in the upper western Corn Belt over the next few days will make hogs harder to come by, a trader said.

Farmers will keep swine buildings closed to hold in heat, and nobody wants to lose pigs on icy roads, he said.

USDA’s export sales report put U.S. pork exports for the latest week at 27,300 tonnes, down from 35,000 in the prior week.

February lean hog futures closed 1.6 cent/lb. higher at 74.825 cents, and hit a new contract high of 74.95 cents. Most-active April finished up 0.525 cent at 72.825 cents.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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