U.S. livestock: CME live cattle gain ahead of USDA report

Chicago | Reuters — Chicago Mercantile Exchange live cattle gained modestly on Friday as investors tweaked positions before the U.S. Department of Agriculture’s cattle-on-feed report at 2 p.m. CT, traders said.

Analysts expect the data to show cattle placements last month declined from April 2013 after several years of drought in parts of the U.S. reduced the herd to a 63-year low. [Related story]

CME live cattle remained undervalued compared to prices for slaughter-ready or cash cattle, which generated further buying, traders said.

They said Friday morning’s wholesale beef price uptick provided more support to futures.

The Friday morning wholesale choice beef price jumped $1.51 per hundredweight (cwt) from Thursday to $226.72 (all figures US$). Select cuts climbed $1.53, to $217, USDA said.

This week, cash cattle in Texas and Kansas, on average, moved at $145/cwt, down $1 from last week, said feedlot sources. They reported cash cattle sales of $148 in Nebraska, compared to $148 to $150 a week ago.

Packers cut slaughters and pressured cash cattle bids while looking ahead to a seasonal increase in supplies.

On Monday, investors will digest Friday’s USDA cattle report while anticipating cash cattle prices as packers buy animals for the U.S. Memorial Day holiday-shortened workweek.

June ended at 137.9 cents, 0.5 cent higher and August up 0.55 cent at 138.375 cents.

CME feeder cattle set a new high for a third straight day, fuelled by higher live cattle futures and tight feeder cattle expectations.

May closed up 1.15 cents per pound at 187.3 cents, and August up 0.9 cent at 193.325 cents.

Hogs slip on ample supplies

CME hogs were weakened by soft prices for slaughter-ready or cash hogs as packers trimmed kills to make up for production lost from the porcine epidemic diarrhea virus, traders said.

The average hog price in the western Midwest region sagged 69 cents/cwt to $108.95, according to USDA data.

Packers on Friday processed 345,000 hogs, 29,000 fewer than last week and 46,000 less than a year ago, said USDA.

More hogs may come to market next week as farmers move animals ahead of schedule to avoid lower returns as the three-day Memorial Day holiday approaches, a trader said.

Anticipation of tight supplies this summer pegged to PEDv, and hot weather at that time that slow down animal weight gains, could help underpin hog futures on Monday, traders and analysts said.

June hogs ended 0.5 cent lower at 118.925, and July down 0.1 cent at 125.25.

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

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