Chicago | Reuters — U.S. live cattle futures climbed to a nine-month high on Tuesday, extending gains from the previous session on chart-based and investment fund buying, traders and analysts said.
Feeder cattle and lean hog futures also rose at the Chicago Mercantile Exchange, with feeders reaching the highest levels since August.
Trading limits in both live and feeder cattle will be expanded on Wednesday after some contracts gained their respective limits, the CME Group said on its website.
“We literally did not have a down tick since 11 a.m. (on Monday). It’s a massive move,” Top Third Ag Marketing broker Craig VanDyke said of cattle. “The cash flows have been hugely beneficial. We’ve seen the funds build a huge long position.”
Open interest in CME cattle has climbed to multi-year highs during the recent rally, suggesting speculative investors were adding to their net long position, data from the CME Group and the U.S. Commodity Futures Trading Commission showed.
Investors also were rolling out of front-month positions in cattle and hog futures as part of a five-day roll for funds tracking the Standard + Poor’s Goldman Sachs Commodity Index. Short-covering in the front-month contracts further supported prices, the traders said.
CME February live cattle finished up their daily price limit of three cents at 119.525 cents/lb., the highest since March 29. The gains during the past two sessions of 2.6 per cent were the largest in about two months.
CME March feeder cattle gained their price limit of 4.5 cents to settle at 130 cents/lb.
Live cattle price limits will expand on Wednesday to 4.5 cents and feeder cattle limits to 6.75 cents.
CME February lean hogs were 1.3 cents higher to 65.05 cents/lb., still locked in a relatively tight band that has defined the trade since the roughly six-month highs reached on Dec. 19.
Gains in cash hog markets have buoyed futures prices, offsetting pressure from a record-large U.S. hog herd.
The U.S. Department of Agriculture after the close of futures trading said hogs in the top cash market of Iowa and southern Minnesota gained $1.40 to an average of $59.37/cwt.
USDA also said that wholesale pork fell $1.64, to $78.22/cwt, while choice-grade wholesale beef tumbled $3.97, to $193.38.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.