Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rose on Friday in tandem with higher equities and energy markets as a robust slaughter pace and concerns about reduced cattle supplies in the coming months fueled buying.
Packers have accelerated their daily slaughter pace following plant downtime around Monday’s Labour Day holiday and they were seeking replacement supplies of cattle.
Meanwhile, drought in the southern Plains has scorched grazing pastures and triggered a larger-than-normal cull of the breeding herd, a sign that beef cattle supplies will tighten and remain tight next year and beyond.
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“It was partially risk-on trade spilling over into livestock markets. But we’ve had a very strong cattle market in the daily slaughter numbers all week,” said Mike Zuzolo, president of Global Commodity Analytics.
“That kind of higher level of slaughter suggests there’s pretty moderate packer demand out there,” he said.
The U.S. Department of Agriculture estimated the week’s cattle slaughter through Saturday at 604,000 head, up from 579,000 head in the same week last year.
A USDA report issued on Thursday also confirmed that the fed cattle slaughter in the week before Labour Day was the largest for any week so far this year, analysts said.
Benchmark CME October live cattle rose 1.3 cents to 145.675 cents/lb. and December gained 1.325 cents to close at 150.975 cents/lb. (all figures US$).
Feeder cattle followed higher live cattle, despite rising corn feed prices on Friday. October feeders ended at 185.575 cents/lb., up 1.175 cents.
Lean hog futures also rose on Friday in a technical and short-covering bounce, following a recent slide in cash market prices.
CME October lean hogs added 1.05 cents to settle at 93.175 cents/lb., while December hogs gained 0.45 cent to 83.125 cents/lb.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.
