U.S. livestock: Fund buying drives CME live cattle higher

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Tuesday gained for a second day in a row on fund buying and higher wholesale beef prices, traders said.

December live cattle closed up 0.775 cent/lb. to 111.125 cents (all figures US$). February ended 1.025 cents higher at 113.975 cents.

“Most certainly fuelled by a variety of fund-type buying, this rally is sending fundamentally oriented speculative shorts scampering to the sidelines,” said Cassandra Fish, author of industry blog The Beef.

Futures made headway despite possibly lower prices for slaughter-ready, or cash, cattle by midweek.

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There are more cattle for sale this week after processors bought fewer of them last week. And some packers have cut slaughters to increase their margins and drive up wholesale beef prices.

Monday and Tuesday’s combined cattle slaughter totaled 226,000 head, 5,000 fewer than last week, according to U.S. Department of Agriculture estimates.

Tuesday morning’s choice wholesale beef price was $1.69/cwt higher than on Monday at $191.25. Select cuts rose 81 cents, to $174.76, USDA said.

Packers last week in the U.S. Plains paid $109-$112/cwt for cash cattle.

Investors will take their cue regarding cash prices from Wednesday morning’s sale of more than 7,000 cattle at the Fed Cattle Exchange.

Buy stops, higher cash feeder cattle prices and stronger live cattle future’s sent CME’s feeder cattle contracts higher. January feeders closed up 0.425 cent/lb. to 128.975 cents.

Hogs close higher

Profit-taking and cash price unease snapped CME lean hogs’ six-session win streak, but not before the recent run up in cash prices sent futures to a three-month high.

December hogs, which will expire on Wednesday, closed down 0.2 cent/lb. to 57.175 cents. Most actively traded February ended 0.425 cent per pound lower at 61.75 cents.

Tuesday morning prices for cash hogs around the U.S. Midwest were mostly steady as snow and fallen temperatures in the region curtailed the movement of livestock to market, Midwest hog merchants said.

Cash prices could soon peak after packers fill inventories for this week’s production, said traders and analysts. They added that pork cutout prices could decline as grocers get closer to finalizing year-end holiday ham purchases.

USDA data showed Tuesday morning’s average wholesale pork price dropped 84 cents/cwt from Monday to $75.54, following an almost $5 drop in hams.

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

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