October 18, 2010

 

US cattle futures peak to contract highs on cash

 

 

US cattle futures closed about 2% higher on Friday (Oct 15), with December up 1.3% for the week and the highest in nearly a month, as investors were surprised and cheered by a US$2- to US$2.50-jump in cash cattle prices this week, traders said.

 

In addition April 2011 through February 2012 cattle set contract highs for the fifth time in the past six trading days.

 

Hog futures followed cattle higher, but struggled as lower cash markets tempered buying.

 

In cattle, packers paid US$97-97.50 per cwt for steers and heifers in feedlot markets late on Thursday, up from last week's US$95. Higher beef prices this week likely caused the higher cash bids.

 

Wholesale beef prices were higher on Thursday and on Friday, with USDA reported the Friday price at US$154.68 per cwt, up US$1.44 from Thursday and the highest so far in October.

 

USDA on Friday reported beef export sales last week were 11,200 tonnes, lead by sales to Mexico, Canada, Japan, South Korea, and Taiwan. Year-to-date export commitments are up 26.1% from a year ago.

 

October cattle closed up 2.075 cents, up 2.16%, at 98.150 cents per lb and December up 1.850, 1.9%, at 100.125 cents.

 

Feeder cattle took their cue from live cattle and advanced sharply. Higher fed cattle prices should prompt better demand to put feeders in feedyards.

 

October feeders closed up 0.650 cent, up 0.6%, at 108.750 cents per lb, November up 1.250, 1.16%, at 109.375 cents and January up 0.675, about 0.6%, at 109.600 cents.

 

Falling cash hog prices limited gains in hog futures despite support from cattle pits. Cash hog prices, basis Iowa/Minnesota, on average dropped US$7 per cwt on a carcass basis this week, or 10%.

 

December lean hogs closed up 0.050 cent at 68.900 cents per lb and February up 0.450 at 73.325 cents.