Chicago | Reuters — Chicago Mercantile Exchange live cattle futures hit a three-week high on Tuesday on sinking corn feed prices and concerns that hot, dry weather at central and southern Plains feedlots will continue to shrink livestock supplies, traders said.
Technical buying further fueled the gains as cattle markets advanced despite broad-based selling across equities markets, energy and other commodities.
Temperatures across the major cattle producing region from Nebraska to Texas are forecast to be above to well above average for the next two weeks with below-normal precipitation.
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The hot weather may slow cattle weight gains at feedlots while dry conditions are likely to limit grazing pasture growth, prompting some producers to thin their herds.
“With the drier weather out west, you’re sending cattle to town and the idea is that the calf crop is going to keep getting smaller,” said Matthew Wiegand, broker with FuturesOne.
“The longer-term trend isn’t going to be great for the cattle numbers and with the corn giving it some relief, you sparked some buying,” he said.
August live cattle futures gained 0.525 cent to settle at 136.675 cents/lb. The contract held technical support at its 200-day moving average and broke through chart resistance at the 100-day moving average on its climb to the highest since June 21.
CME August feeder cattle surged 4.7 cents to close at 179.575 cents/lb., the highest point since late March.
Feeders drew support from tight cash market supplies and a sharp drop in corn prices following a bearish government supply-and-demand forecast on Tuesday.
CME lean hog futures ended mixed as traders weighed firmer pork prices against good hog supplies and longer-term pork demand concerns, notably for exports to China.
August lean hogs settled 0.625 cent higher at 109 cents/lb. Deferred contracts were down as much as 0.825 cent.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.
