Chicago | Reuters — Chicago Mercantile Exchange live cattle futures ended higher on Friday after dropping to a six-week low, as traders adjusted positions before a government report showed lower-than-expected placements in U.S. feedlots last month.
The data, which the U.S. Department of Agriculture (USDA) issued after trading ended, should further support cattle futures next week, traders said.
The USDA report said cattle placements into feedlots during July totaled 1.62 million head, down 8.3 per cent from 2022. Analysts were expecting a 5.5 per cent drop.
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A rise in prices for grains used for livestock feed during the second half of July likely discouraged producers from placing cattle into feedlots, said Altin Kalo, agricultural economist for Steiner Consulting. Also, some geographic areas had improved pastureland for grazing, allowing producers to keep the animals out of feedlots, he said.
Drought prompted U.S. cattle producers to reduce their herds since last year by driving up feed costs and reducing the amount of pasture available for grazing.
“Some areas had some better grass,” Kalo said.
Most-active October live cattle ended up 0.5 cent at 178.825 cents/lb. after hitting the lowest price since July 7. September feeder cattle rose 1.4 cents to close at 248.525 cents/lb. at the CME.
Next week, activity in outside markets could influence cattle futures, along with Friday’s USDA report, Kalo said.
“How much is that going to temper what I would construe as a moderately bullish report?” he said.
The USDA report also said 11 million cattle were on feed for the slaughter market as of Aug. 1, down 2.3 per cent from a year earlier. Analysts were expecting a 1.6 per cent decline.
In the lean hog market, most-active October futures climbed 2.975 cents, to 82.125 cents/lb., after falling on Wednesday to their lowest price since June 30.
USDA quoted the wholesale pork carcass cutout at $106.17/cwt, down $1.62 from Thursday.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
