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

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle rose sharply for a second straight day on Thursday, driven by short covering and fund buying, said traders.

Investors, for now, are focused more on what packers will pay for cattle in the near term than a potential trade war with China, a trader said.

On Wednesday China targeted beef and other U.S. goods for stiffer duties if Washington follows through on threats to increase tariffs on $50 billion in Chinese goods (all figures US$).

China is a small but growing market for U.S. beef that re-emerged in June 2017 after a 13-year absence due to concerns over BSE.

After returning to China, U.S. beef exports in the second half of 2017 totaled 3,020 tonnes valued at $31 million, according to the U.S. Meat Export Federation (USMEF).

Packers this week paid $116-$118/cwt for market-ready, or cash, cattle that last week sold for $120-$121.

Current futures prices, seasonally sluggish wholesale beef movement and ample supplies discouraged packers from paying up for livestock.

April live cattle closed up 1.275 cents/lb. at 114.3 cents. June ended 2.725 cents higher at 105.05, and above the 10-day moving average of 104.095 cents.

Higher live cattle futures and technical buying boosted CME feeder cattle contracts.

April closed 2.975 cents higher at 137.475 cents.

Hogs end mostly higher

Most CME hog contracts settled higher after investors sold April futures ahead of its April 13 expiration and bought remaining trading months, traders said.

Sharply higher CME cattle futures encouraged the exchange’s deferred-month hog market buyers, they said.

However, China’s higher tariffs on U.S. pork that took effect on Monday limited market advances, said traders and analysts.

Last year China/Hong Kong was the second-largest volume market for U.S. pork at 495,637 tonnes, according to the USMEF.

On Thursday, hog prices rose for the first time in almost two weeks after a few packers shored up inventories for early next week’s production, a Midwest hog dealer said.

He said other packers might compete for hogs when snow and cold temperatures in parts of the country give way to weather more suited for spring grilling.

April hogs closed down 0.625 cent/lb. at 52.45 cents. May ended 2.975 cents higher at 65.85 cents, and June finished 0.55 cent higher at 73.825 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

About the author


Stories from our other publications