U.S. livestock: CME live cattle rise on firmer cash price expectations

Chicago | Reuters — Chicago Mercantile Exchange nearby live cattle contracts on Friday gained for a second straight day, guided by expectations for steady-to-higher cash prices by late Friday, traders said.

October live cattle, which expire on Oct. 31, finished 1.225 cents/lb. higher at 115.375 cents (all figures US$). Most actively traded December closed up 0.125 cent, to 120.825 cents.

So far packer bids for slaughter-ready, or cash, cattle in the U.S. Plains were $111-$112/cwt against sellers asking $116. Last week cattle fetched $110-$112 per cwt, according to the U.S. Department of Agriculture (USDA).

Cash prices might benefit from fewer animals for sale than a week ago and rising profits for packers as they charge retailers more for beef, said analysts and traders.

Some packers may be forced to pay more for supplies that might be hard to come by after feedlots moved cattle to market ahead of schedule to avoid a late fourth-quarter supply increase.

“Cattle supplies could be marginally tighter than originally anticipated in the coming months, which may support cash prices,” an analyst wrote in his newsletter to clients.

On Friday, USDA projected this week’s cattle slaughter down 12,000 head from last week.

Profit-taking and deferred-month live cattle futures weakness undercut CME feeder cattle.

November feeder cattle closed down 0.7 cent, to 156.475 cents.

Hog futures slip

CME lean hogs were pressured by softer cash prices and profit-taking after three days of gains, said traders.

December hogs ended 0.6 cent/lb. lower at 64.45 cents, and February closed down 0.275 cent to 70.25 cents.

Packers this week reined in cash spending after consistently bidding up for hogs in recent weeks to maintain market share, which trimmed their margins.

The cash market had an impressive rally the past three to four weeks, “so I think it’s probably time we take a little breather,” a Midwest hog merchant said.

He said that so far an early-winter storm in parts of Minnesota and Iowa has not hampered transportation of hogs to packing plants in the region.

Market participants are keeping tabs on pork demand as National Pork Month winds down, which would allow grocers a chance to promote beef and chicken, said traders and analysts.

They said U.S. Thanksgiving and Christmas holiday ham business, and end users storing pork bellies for spring and summer bacon demand, will largely influence wholesale pork prices over the next several weeks.

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

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