Chicago | Reuters — Chicago Mercantile Exchange live cattle futures gained about one per cent on Friday, rallying from losses in the previous session on the back of investment fund buying and optimism for higher prices in U.S. Plains cash cattle markets, traders said.
Feeder cattle prices rose while lean hogs were mostly higher, underpinned by fund rebalancing, short-covering and strong cash hog markets.
Traders were awaiting for deals to develop in cash cattle markets following stronger prices earlier this week at the online Fed Cattle Exchange auction.
CME February live cattle finished 1.05 cents higher at 118.525 cents/lb. and the April contract was up 1.45 cents to 117.925 cents. CME March feeder cattle climbed 1.55 cents to 129.3 cents/lb.
“Overall, feedyards are really current and therefore the cash should stay elevated,” Schwieterman Inc. broker Domenic Varricchio said of relatively tight supplies of cattle available for slaughterhouses.
Winter storms forecast in the coming days in the Plains could also disrupt shipments of animals or slow the rate of weight gains in bitter-cold temperatures.
“Weights might drop off if this winter storm is bad,” Varricchio added.
The Commodity Futures Trading Commission after the close of trading said speculative investors, including hedge funds, increased their net longs in both live cattle and lean hog futures, and slightly reduced their feeder cattle net long.
Investors were rolling out of front-month contracts in all three livestock contracts this week, with long liquidation prompting losses on Friday in front-month February lean hogs.
CME February hogs settled 0.35 cent lower at 65.6 cents/lb. CME April hogs gained 0.075 cent to 69.825 cents while all other deferred hog contracts were either slightly higher or unchanged.
The U.S. Department of Agriculture said lean hog prices in the key market of Iowa and southern Minnesota gave back a portion of their recent gains, easing 34 cents to an average price of $62.12/cwt.
CME livestock futures trading will be closed on Monday for the U.S. holiday Martin Luther King Jr. Day.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.