Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Wednesday for a third session as strong demand for beef ahead of the Labour Day holiday bolstered margins for meat packers, traders said.
CME October live cattle futures ended up 0.225 cent at 100.225 cents/lb., and October feeder cattle settled up 0.9 cent at 134.55 cents/lb. (all figures US$).
“The wholesale beef market has been very strong, and the packer margins are through the roof. Those are supportive factors for cattle demand,” said Doug Houghton, analyst with Brock Associates Inc.
The U.S. Department of Agriculture on Wednesday quoted choice boxed beef cutout at $241.74/cwt, up four cents from Wednesday and the highest in more than two years. Select cutout rose $1.43, to $215.70.
Also bullish, the U.S. cattle slaughter has not slowed as much as some had feared following an Aug. 9 fire that shuttered a Tyson Foods slaughterhouse near Holcomb, Kansas.
News of the fire sent CME live cattle futures tumbling last week, but the market has since stabilized.
“The industry has gotten over the shock of the Holcomb, Kansas, plant closing for now. The market got technically oversold too, so it’s trying to bounce back,” Houghton said.
CME lean hog futures closed lower, pressured by plentiful hog supplies that have weighed on cash hog and pork values.
USDA reported Wednesday’s daily hog slaughter at 482,000 head, matching Tuesday’s kill.
“We’re running a very big slaughter. It’s just a lot of hogs,” Houghton said, adding that seasonal strength in prices for pork bellies, the source of bacon, is fading.
“The large hog supplies and seasonal weakness of pork prices does not paint a good picture,” Houghton said.
CME October hogs settled down 1.675 cents at 63.3 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.