U.S. livestock: Live cattle futures firm on strong cash market, rising beef prices

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Chicago | Reuters – U.S. live cattle futures firmed on Friday, supported by strong cash feedlot cattle and beef prices and robust packer profit margins.

The market posted a modest decline for the week after eight straight weeks of gains, but prices remain near six-month peaks reached after the two-month rally took futures up by around 25 percent.

“Everything is still firing on all cylinders. We have higher cash cattle trades this week, new highs for the up-trend for February and April contracts, and wholesale beef continues to rally,” said Rich Nelson, chief strategist with Allendale Inc.

“On top of that, packers still have strong margins so everything out there is suggesting we still have a strong rally going on in cattle,” he said.

Chicago Mercantile Exchange (CME) December live cattle ended 0.250 cent higher at 119.250 cents per pound, while February futures gained 0.175 cent to 125.025 cents.

Cash cattle at U.S. Plains feedlot markets traded at $114 to $115 per cwt or more this week, up about $2 from a week ago.

Although packers paid up for cattle, slaughter margins remained highly profitable as beef prices have also rallied.

The wholesale choice boxed beef cutout value was 83 cents higher on Friday at $239.12 per cwt, gaining $5.92 in the week, according to the U.S. Department of Agriculture. Select cuts were up 24 cents at $213.26 per cwt, up $5.75 in the week.

Estimated U.S. beef packing margins swelled to $362.30 per head on Friday, up from $326.80 a week ago and $209.25 a month ago, according to livestock marketing advisory service HedgersEdge.com.

Feeder cattle futures ended mixed, with CME January feeder cattle, the most actively traded contract, ended up 0.100 cent at 145.875 cents per pound.

Lean hog futures were also mixed as the market weighed prospects for large U.S. pork sales to China against ample supplies of hogs.

After optimism on Thursday that Washington and Beijing have agreed to phased reductions in tariffs as part of an interim trade deal, U.S. President Donald Trump on Friday said he has not agreed to any such rollbacks.

China needs pork imports as African swine fever has decimated its hog herd, but retaliatory tariffs on U.S. pork have importers paying duties of up to 72 percent on U.S. shipments.

CME December lean hogs fell 0.175 cent to 64.125 cents per pound, while February futures rose 0.125 cent to 73.900 cents per pound.

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