U.S. livestock: Live cattle rally on fund-driven buying

CME lean hogs end narrowly mixed

CME February 2021 live cattle with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. live cattle futures rose two per cent on Tuesday, bouncing back from a sell-off a day earlier, lifted by speculative buying and broad strength in commodities as investors seek a hedge against inflation, analysts said.

Chicago Mercantile Exchange (CME) February live cattle futures settled up 2.75 cents at 115.05 cents/lb. (all figures US$).

Feeder cattle futures followed the live cattle market, shrugging off pressure from rising corn futures. CME March feeder cattle settled up 1.4 cents at 137.425 cents/lb.

“Funds are entering the meat space,” said Don Roose, president of Iowa-based U.S. Commodities. “It’s in vogue as the dollar sinks, as the debt rises in the U.S., that inflation is trying to pick up. And commodities are an inflationary hedge,” Roose said.

The flow of fresh investment helped to offset pressure from a drop in wholesale beef prices. Choice boxed-beef cuts were down $3.97 on Tuesday afternoon to $205.90/cwt and select cuts were down four cents at $196.49, the U.S. Department of Agriculture said.

Cash cattle markets were quiet. One analyst noted talk of market-ready cattle trading at $113/cwt in South Dakota, up $1 from the bulk of last week’s cash trade. However, beef packing margins have fallen to $159.35 per head, from $172.20 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.

Lean hog futures closed narrowly mixed. CME February lean hogs settled down 0.3 cent at 70.925 cents/lb., snapping a four-session climb, while deferred contracts edged higher.

Wholesale pork prices softened, with U.S. pork cutout down 14 cents at $77.63/cwt on Tuesday afternoon, according to USDA.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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