U.S. livestock: Funds, short-covering extend CME live cattle gains

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday closed higher for a third day in a row, led by fund buying and investors who covered previously short positions, said traders.

December led advances after funds in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index bought that contract and sold, or rolled, out of October futures.

Friday was the first of five days for the “roll” process.

October live cattle finished 1.1 cents/lb. higher at 107.325 cents, and above the 20-day moving average of 106.541 cents (all figures US$). December closed 1.725 cents higher at 112.85 cents, and above the 40-day moving average of 112.375 cents.

Futures rose in the face of tepid wholesale beef demand and uncertainty regarding this week’s slaughter-ready, or cash, cattle prices.

So far, packers in the U.S. Plains tabled bids of $102 and $105/cwt for cash cattle priced above $107, said feedlot sources. A week ago, cash cattle fetched $103 to $105.

Some processors need cattle after not purchasing a significant number of them last week, but supplies appear ample and animal weights have increased, which creates more tonnage of meat, a trader said.

He said feedlots are reluctant to sell cattle at lower prices knowing that packers are running plants with extremely profitable margins.

On Friday, the U.S. Department of Agriculture’s (USDA) export sales report for the week ended Aug. 31 showed U.S. beef sales at 5,900 tonnes, the lowest this year.

The decline was due to an adjustment in product reporting by exporters to Egypt, an industry source said.

More live cattle futures advances and technical buying sent CME feeder cattle upward for a third consecutive session.

September closed 2.325 cents/lb. higher at 147.875 cents.

Hog futures rebound

Fund buying, bargain hunting and short-covering pared some of CME lean hogs’ recent losses, said traders.

October ended up 0.7 cent/lb. to 62.15 cents, and December finished 0.625 cent higher at 58.9 cents.

Uneasiness about cash hog prices and wholesale pork demand, amid abundant supplies, pulled futures from morning highs.

“There’s no getting around it, there’s just too many hogs,” said Schwieterman Inc. broker Domenic Varricchio.

USDA estimated this week’s hog slaughter at 2.17 million head, 84,000 more than a year ago.

Friday’s USDA export report showed U.S. pork sales at 25,700 tonnes, mostly for Japan, compared to 25,900 the week before.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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