U.S. livestock: Live cattle climb to new six-month peak on rising cash market

Chicago | Reuters – U.S. live cattle futures scaled a six-month high on Monday, propelled by firming cash cattle and beef prices and strong packer margins, analysts said.

Chicago Mercantile Exchange (CME) December live cattle settled up 0.550 cent at 120.075 cents per pound, its highest level since April 25. February futures gained 0.375 cent to 124.600 cents per pound.

“We’ve got nothing but great news regarding cash cattle trade. Last week’s average price was $112 (per cwt), up $2, and futures are implying we’ll be up to $119 by December,” said Rich Nelson, chief strategist with Allendale Inc.

“Packers have some very, very strong processing margins so they can actually pay up if they needed to,” he said.

The U.S. Department of Agriculture (USDA) reported the choice boxed beef cutout value on Monday at $234.81 per cwt, up $1.61 from late Friday and up $6.91 from a week earlier. Select cuts were up $2.87 at $210.38 per cwt, $9.62 above week-ago levels.

U.S. beef packers were earning an estimated $326.25 per head of cattle, up from $286.25 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.

Feeder cattle were mixed on Monday as technical selling in the wake of last week’s steep rally partly offset support from higher live cattle futures and weaker corn prices.

CME January feeder cattle futures, the most-active contract, ended at 146.000 cents per pound, unchanged from Friday’s close, which was the highest since early May. Other contract months settled 0.050 lower to 1.075 higher.

Lean hog futures closed mostly lower, pressured by ample supplies of hogs and worries that an anticipated U.S.-China trade deal may not come soon enough to absorb the excess supply of U.S. pork.

Livestock traders are watching for any progress in U.S.-China trade talks after recent meetings have generated promises for large purchases of U.S. farm products.

Pork export sales to China, according to USDA data, have fallen short of expectations in the past two weeks.

Officials from the United States and China said on Friday that they have made progress in talks aimed at diffusing the 16-month-long trade war.

CME December lean hogs were the only higher contract on the day, gaining 0.075 cent to 64.525 cents per pound. February futures dropped 0.675 to 71.900 cents per pound.