Chicago | Reuters – U.S. cattle futures jumped over 1 percent on Wednesday, with feeder cattle prices leading the way higher after corn futures fell, traders and analysts said.
Feed costs are a top expense for fattening cattle and Chicago Mercantile Exchange feeder cattle surged as corn futures turned lower from a roughly 1-1/2 month high.
CME September feeder cattle finished up 2.375 cents at 151.950 cents per pound, rising for the first time in three sessions and notching the biggest daily gains since July 18.
More actively traded CME October live cattle finished up 0.975 cent to 110.275 cents per pound.
Some traders exited earlier short positions in feeder cattle as corn prices turned lower, said Domenic Varricchio, consultant at Roach Ag Marketing Ltd.
“It was a good, old fashioned short squeeze in feeders … and that’s directly related to the corn trade,” Varricchio said, adding that live cattle futures had comparatively smaller gains due to weaker trades in cash cattle markets.
On the Fed Cattle Exchange online weekly auction, more than 1,000 cattle sold for an average price of about $110 per cwt.
That compares to cash cattle trades last week in the U.S. Plains of about $112 and light trades this week of $109 to $110.
Lean hog futures remained under pressure from abundant supplies, lower prices for cash hogs and for pork, and tariffs on U.S. pork imports in Mexico and China.
The August and October hog contracts fell to lifetime lows for the second straight session. August hogs finished down 0.875 cent at 60.250 cents per pound while October hogs recovered to end up 0.050 cent at 50.775 cents.
Packers have scaled back slaughter rates slightly in efforts to protect their profit margins as prices for both pork and beef have declined seasonally following a series of U.S. summer holidays that generally result in increased meat sales for outdoor grilling.
Wholesale U.S. pork prices eased 18 cents to $73.87 per cwt and choice-grade beef was down 52 cents to $203.75, according to the U.S. Department of Agriculture.
Pork packer margins were estimated at $21.85 per hog, up from $16.80 a week ago, and beef packer margins at $121.70 per cattle, down from $132.80 a week ago, according to HedgersEdge LLC.
“(Packers) know there’s too many hogs,” Varricchio said.