Chicago | Reuters — Chicago Mercantile Exchange live cattle futures shot higher on Wednesday on short covering and technical buying as the market extended a rebound from a nine-year low this week.
CME October live cattle futures ended up 2.35 cents at 98.5 cents/lb. (all figures US$).
The market has climbed since October live cattle on Monday set a contract low and reached its lowest price since 2010 on a continuous chart of front-month futures.
December live cattle finished up 2.4 cents to 103.625 cents/lb. and set a one-week high. October feeder cattle reached a two-week high, ending up 2.975 cents at 134.025 cents/lb.
“We are extremely oversold in the cattle,” said Brian Hoops, president of U.S. broker Midwest Market Solutions.
Cattle futures and cash prices have been under pressure since a fire at a Tyson Foods slaughterhouse at Holcomb, Kansas last month removed a key buyer from the market.
Cash cattle traded at $100/cwt last week, down from $103 the previous week, according to traders.
Feedlots in the southern Plains are asking packers to keep paying $100/cwt for cattle, more than the companies’ bids for $97 and $98/cwt this week, Hoops said.
“If we can see cash stabilize at the $100 area, October futures appear to be way too cheap,” he said.
In the hog market, futures fell to their lowest prices in more than two weeks in a setback from a rally on Tuesday that was fueled by hopes for increased Chinese buying.
China announced its first batch of tariff exemptions for 16 types of U.S. products on Wednesday, but major U.S. imports, including pork, are still subject to hefty additional duties.
Many traders expect China to increase pork imports as it struggles with African swine fever, a fatal pig virus that has reduced its herd by a third since the disease arrived in the country more than a year ago.
But the U.S. has not made major pork sales to China recently. U.S. hog weights are also increasing, adding pressure on prices, traders said.
The estimated average weight in Iowa, southern Minnesota and South Dakota was 281.5 lbs. in the week ended Sept. 7, up from 278.3 the previous week and 279.1 a year earlier, according to U.S. Department of Agriculture data.
CME October lean hogs finished down 2.55 cents at 60.175 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.