December 1, 2010
US cattle advances to 26-month high while hogs drop
US feeder-cattle futures surged to a record 26-month high as lower grain costs spurred speculation that feedlots will boost purchases of the young animals, while hogs fell.
Corn, which is the key ingredient in livestock feed, fell 6.5% in November on CBOT, ending a five-month rally. Feeder cattle also increased after the cash-cattle price jumped to US$1.04 a pound in Texas, the highest since October 2003, said an analyst. The spot price is a gauge of demand.
"It looks like cash cattle is leading on the feeder cattle," the analyst said. "A good drop in corn is also helping those feeders today."
Feeder-cattle futures for January settlement rose US$0.00775 or 0.7%, to settle at US$1.1918 a pound on the Chicago Mercantile Exchange.
Earlier, prices reached US$1.2018, the highest for a most-active contract since the commodity started trading on November 30, 1971. Futures rose 7.6% this month, the most since March.
Feedlots boosted purchases of young cattle by 1.2% last month, more than what was forecasted as profit prospects rose.
Feedlot operators buy year-old animals that weigh 500 pounds (227 kilogrammes) to 800 pounds (363 kilogrammes), called feeders. The cattle are fattened mostly on corn until they weigh about 1,200 pounds (544 kilogrammes) when they are sold to meatpackers.
Cattle futures for February delivery rose US$0.006 or 0.6%, to settle at US$1.0638 a pound. Earlier, prices reached US$1.067, the highest since September 2, 2008. The commodity gained 7.6% in November, the most since May 2008.
Hog futures for February settlement fell US$0.0045 or 0.6%, to settle at US$0.7578 a pound on the CME. Earlier, the price touched US$0.7525, the lowest since November 18.
Wholesale pork fell for a third straight session yesterday (Nov 30), according to USDA data. Hog carcasses averaged almost 210 pounds (95 kilogrammes) on November 26, the most since 2002. The dollar rose to a 10-week high against a basket of major currencies, reducing the appeal of US meat exports.
