Chicago | Reuters — Chicago Mercantile Exchange feeder cattle futures rallied from five-month lows on Tuesday in a short-covering and technical-buying bounce, traders said.
Live cattle futures followed feeders higher, although gains were clipped by limited packer demand for U.S. Plains feedlot cattle ahead of next week’s shortened Thanksgiving holiday week slaughter.
Actively traded January feeder cattle touched a five-month low before rallying more than two per cent and closing near its session high. The contract ended up 3.25 cents at 146.975 cents/lb. (all figures US$).
“We had a major technical reversal in the feeder cattle,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.
“The technical bounce spilled into the live cattle.”
The feeder cattle market rallied as technical traders bought back their short positions after the January contract hit a low of 142.675 cents. That price was a pivot point marking a 62 per cent pullback of the contract’s rise from a life-of-contract low this spring to a contract high last month, and a bullish technical signal.
CME December live cattle settled up 0.45 cent at 115.375 cents/lb. Deferred contracts were as much as 0.825 cent higher.
Traders said gains in cash cattle prices will likely be limited as packers do not need many cattle in the near term. Packing plants are expected to be closed for at least a day next week for the U.S. Thanksgiving Day holiday on Thursday.
Lean hog futures remained largely firm as worries about an expanding outbreak of African swine fever in China underpinned the market.
Lean hogs also drew support from the December contract’s discount to the CME lean hog index, which most recently stood at 61.87 cents.
CME December hogs gained 0.75 cent to settle at 57.3 cents/lb., while the more active February hog contract was up 0.65 cent at 62.175 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.