Chicago | Reuters — U.S. live cattle futures rose sharply for the second straight session on Wednesday, reaching a six-week high, on technical buying and expectations that beef packers would pay higher prices for cattle this week, traders said.
Cattle futures had declined earlier on Tuesday before turning higher and then surpassing the previous session’s peak. That so-called reversal enticed buyers on Wednesday, said independent futures trader Dan Norcini.
“You had some momentum-based buying … the technicals on the charts look really good,” Norcini said.
Chicago Mercantile Exchange February live cattle futures finished up 0.75 cent at 122.9 cents/lb., just below the session peak of 123 cents that represented the highest level since Oct. 30 (all figures US$).
CME January feeder cattle settled up 0.275 cent at 147.575 cents/lb., the highest since Nov. 28 and the third straight day of gains.
Trading in cash markets for slaughter-ready cattle was not yet established but some dealers were optimistic for higher prices than the $119 per cwt fetched last week. Feedlots in the U.S. Plains were offering fewer animals for sale this week, traders said.
Lean hog futures were mostly higher on bargain buying after prices fell earlier in the session. Most-active February lean hogs climbed 0.5 cent to 65.7 cents/lb., recovering from their two-week low of 64.775.
Hogs had been under pressure from weaker cash hog prices.
However, average hog weights in the top market of Iowa and Minnesota fell to 284 lbs., down from 284.5 lbs. a week ago and 286.1 lbs. a year ago, according to the U.S. Department of Agriculture.
Lower average weights result in reduced overall supply. “That 0.5 drop week over week will be viewed as friendly,” one hog broker said.
Additionally, more cases of the highly contagious African swine fever virus were reported in top hog producer and pork producer China. Expectations the disease could force China to import more pork has bolstered U.S. hog prices for weeks.
China’s agriculture ministry said two new outbreaks were confirmed in Sichuan and Qinghai provinces.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.