Chicago | Reuters — U.S. lean hogs gained the most in a week on Tuesday while cattle futures rose for the eighth straight session, with each commodity rising in tandem with wholesale meat prices on signs of growing demand, traders said.
Trading volumes in the livestock contracts were relatively subdued at the Chicago Mercantile Exchange as investors instead reacted to bullish government grain stocks data that sent prices surging for the animal feeds of corn and soymeal.
CME June lean hogs gained 0.65 cent to settle at 80.8 cents/lb., rebounding after falling in the previous two sessions (all figures US$). CME June live cattle reached a one-month high of 123.850 cents/lb., before settling down 0.025 cent at 123.275. All deferred live cattle contacts settled higher.
“The volatility in the grains really hampered livestock,” said CHS Hedging analyst Steve Wagner, adding that higher feed prices capped gains in cattle and hog prices.
The U.S. Department of Agriculture in a monthly report showed smaller-than-expected stockpiles of soy and corn, due in part to reduced harvests in South America. USDA also predicted higher animal feed use, which will contribute to increased beef, pork and poultry output.
For now, supplies of cattle and hogs were relatively in balance with demand, forcing meat packers to boost their bids to keep farmers bringing the animals to slaughter houses.
USDA showed wholesale pork prices hovering near their highest since October. Wholesale beef has climbed sharply from its roughly five-month low from Monday, and cattle feedlots in the southern Plains were seeking more money than the roughly $128/cwt they sold their cattle for last week.
“You have one heck of a spread between where packers want to buy and where (feedlots) will be selling. That’s kind of the underlying theme to the cattle right now,” Wagner said.
Feeder cattle futures were slightly lower, with most-active August futures settling down 0.525 cent at 150.325 cents/lb. Profit margins for fattening animals typically ease when feed costs rise.
“Feeders were losing ground again to corn was the main issue,” Global Commodities Analytics analyst Mike Zuzolo said of investors buying corn futures and selling feeder cattle.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.