U.S. livestock: Cattle futures limit up on better cash sales

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures surged by their three cents/lb. daily price limit on Friday, boosted by investment fund buying and better-than-expected sales in cash cattle markets, traders and analysts said.

Feeder cattle futures also climbed by their daily limit, of 4.5 cents/lb., tracking the higher prices in the more actively traded live cattle market while CME lean hogs were widely mixed in spread trading.

Some investors were cleaning up their books on the final trading day of the month and quarter, with short-covering in both cattle and hogs also underpinning prices.

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Most-active CME August live cattle futures ended up three cents at 106.725 cents/lb., notching their largest gains in about a month (all figures US$). The June contract expired down 1.2 cents at 107 cents/lb.

Beef packers in Texas paid about $107-$108 per cwt for cattle — sales that were up $1-$3 from deals earlier this week. That suggested more robust demand and triggered buying in futures from investment funds and other dealers, traders said.

CME August feeder cattle futures finished up 4.5 cents to 151.325 cents/lb., highest since March 8.

Price limits in live cattle will expand to 4.5 cents and feeder cattle to 6.75 cents for Monday’s session, the CME Group said on its website.

CME August lean hogs, the most active hogs futures contract, were up 0.725 cent, to 76.45 cents/lb., while front-month July hogs were up 1.75 cents to 82.875 cents. However, deferred contracts for autumn hogs fell sharply, with December hogs sinking 2.025 cents to 54.55 cents.

Forecasts for hotter-than-normal temperatures in the U.S. supported hog and cattle prices, as animals tend to eat less in warmer weather, slowing weight gain and effectively limiting available supplies.

Extreme temperatures should persist through the first week of July, meteorologists said on Friday.

“July (hogs) are a function of the cash market, which is a function of the weather,” said independent livestock trader Dan Norcini. “This (will be) the worst heat of the summer. Probably in the short-term, it will take a little production out of pork.”

— Michael Hirtzer reports on commodity markets for Reuters from Chicago.

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