January 7, 2020

CME live cattle futures rose 2% with feeder cattle futures up 3%

Analysts said cattle futures are benefitting from strong cash market prices and lower supply of livestock in the future, reported Reuters.

Prices are up after the United States signed a trade deal with top US beef importer Japan, and with possible new deals to be signed with Canada and Mexico soon.

According to HedgersEdge.com, a livestock marketing and advisory service, the positive outlook has dropped concerns regarding beef packer margins, which have closed to US$12 per head from US$34.45 a week ago, and US$171.05 one month ago.

Rich Nelson, Allendale chief strategist said last week's cash market was positive and it is set to be better, as the industry is heading into the year's lowest supply in mid February. He added that higher cattle slaughter recently will mean lower supply of calves and feeders in the coming months.

February live cattle futures for the Chicago Mercantile Exchange (CME) reached 2.550 cents, a 2% increase to 127.275 cents per pound. This was a three-week high, and the strongest in four months.

March feeder cattle hit 3.675 cents, a 2.6% increase to 146.350 cents per pound. This was the highest in five months. Contracts from May to November posted all-time highs for this session.

However, CME lean hog futures were mixed, as analysts are worried over China's pace of pork purchases. China and the US are set to sign the Phase 1 of their trade deal next week, with US officials saying exports of US agricultural goods to China will be increased.

Lean hog futures in February fell 0.075 cent to 68.625 cents per pound, while April hog futures dropped 0.200 cent to hit 74.950 cents.

-      Reuters