Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rose more than one per cent on Wednesday on optimism about firmer cash cattle trade this week and inter-market spreading against hog futures, traders said.
The market shrugged off bearish cattle and beef data from the U.S. Department of Agriculture in Monday’s Cold Storage and Friday’s Cattle on Feed reports, and the fact that managed funds already hold a sizable net long position in live cattle futures.
“It looks like the algos are going long cattle and short hogs, trying to get cattle market to break up to the upside,” said John Ginzel, analyst with Linn & Associates.
CME October live cattle futures settled 1.525 cents higher at 113.875 cents/lb. and most-active December ended up 1.65 cents at 118.85 cents (all figures US$). CME October feeder cattle finished up 1.825 cents at 158.3 cents/lb.
Fed cattle traded on Tuesday in Nebraska at $110.50/cwt, traders said, steady with trades last week at $110.50-$111. Cattle were bid on Wednesday in Texas at $109 and offered at $113-$114, traders said, feeding expectations of a higher traded price later this week.
“It seems like there’s some cash optimism for this week,” one cattle trader said. He added that cash cattle volumes have been light in recent weeks, suggesting that beef packers might need to buy more aggressively soon to replenish supplies.
Zero cattle sold out of 424 offered on the weekly Fed Cattle Exchange online auction, according to the exchange’s website.
Lean hog futures closed lower, with front-month October down 0.225 cent at 62.2 cents/lb. after reaching 63.025 cents, its highest level since June 20. December hogs ended down 0.525 cent at 57.225.
Traders were squaring positions ahead of Thursday’s USDA quarterly hog supply report, in which analysts expect the government to show the U.S. herd about 3.5 per cent larger than a year ago.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.