U.S. livestock: Live cattle futures gain on boxed beef strength

Lean hog futures down with slaughter pace

CME December 2020 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures climbed on Wednesday as strength in the cash market and firm beef cutout prices continued to offer support, traders said.

“We’ve had a pretty decent rally on the meat side, and I think that’s certainly been a factor,” said Altin Kalo, economist with Steiner Consulting Group.

Chicago Mercantile Exchange December live cattle futures settled 0.525 cent higher at 112.4 cents/lb. after hitting 112.7, the contract’s highest price since Oct. 12 (all figures US$).

Choice beef cutouts gained 59 cents to $222.84/cwt, while select cuts fell nine cents to $208.46, according to the U.S. Department of Agriculture.

Back-month live cattle contracts for October 2021, December 2021, February 2022 and April 2022 reached life-of-contract highs.

Feeder cattle futures declined for a second day as rising grain prices threatened production costs after USDA’s monthly supply/demand report on Tuesday projected tighter corn and soybean stocks.

CME January feeder cattle futures slipped 0.2 cent to 140.2 cents/lb.

Meanwhile, CME lean hog futures trimmed to their lowest since Oct. 7 as a slower slaughter pace threatens to back up production during a time of weaker domestic demand.

December lean hog futures slipped 0.325 cent to 64.8 cents/lb.

The daily U.S. hog slaughter fell to 459,000 head, down six per cent from a week ago and seven per cent from the same week last year, according to USDA data.

“Are they going to maintain the slaughter pace we’ve seen the last couple weeks?” said Kalo. “Will producers start to get backed up, and will that put some pressure on price?”

Possible pork exports to China remained supportive of the market, as the nation struggles to rebuild its hog herd after African swine fever decimated its pork industry over the past two years.

Traders will monitor pork sales in the USDA’s next weekly export sales report, due on Friday, a day later than normal due to Wednesday’s federal holiday.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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