June 29, 2011
US cattle futures end higher
US cattle futures closed higher on Tuesday (June 28), rebounding from Monday's (June 27) losses as they are influenced positively by a rise in the Dow Jones industrial average, double-digit gains in corn and a US$2 rise in crude oil.
Hog futures finished higher to reclaim some of Monday's losses on support from record high cash pork prices and higher outside markets.
Cash cattle markets were quiet on Tuesday, which left futures traders looking to outside factors for guidance.
"If corn is going to start going back up, that could curb cattle placements," a broker said.
Corn prices dropped sharply early this month, but have since headed back to near US$7 per bushel ahead of a crop report that may show the smallest US corn stocks in seven years.
High feed corn prices can curb cattle production. A weak dollar, which can aid beef exports, and higher beef prices gave cattle additional support. USDA reported the average choice beef price early on Tuesday at US$179.30 per cwt, up 82 cents from Monday and the highest since May 5.
However, analysts believe beef sales will slow after next Monday's US Independence Day holiday as hot summer weather can hurt meat sales.
Spreading limited gains in August cattle as funds bought October and sold August to move longs to deferred months. Such spreading will increase over the next two weeks as other funds participate.
CME Junee cattle 2LCM1 closed up 0.850 cent at 112.350 cents per lb and volume-leader August 2LCQ1 was up 0.375 cent at 111.750. The Junee contract expires on Thursday (June 30). Feeder cattle finished higher, pulled up by live cattle futures and by more gains in cash feeder cattle markets.
The latest CME feeder cattle index, which is a measure of cash prices, jumped 3.01 cents to 133.09 cents per lb. Feeders at the important Oklahoma City market traded up US$1 to US$3 per cwt on Monday.
August feeders 2FCQ1 closed Tuesday up 0.650 cent at 137.875 cents per lb and September 2FCU1 up 0.425 at 138.675.
Hog futures finished mostly higher on record pork prices and higher outside markets.
Late on Monday, USDA said the average wholesale pork price was US$100.74 per cwt, up US$1.68 from Friday (June 24). That is a record highest price because meat buying for domestic holiday business is about finished. Some Chicago traders speculated exports also pushed up the pork price.
August hog futures, like August cattle, were Tuesday's weak link as they finished unchanged as funds bought October and sold August to move long positions to the deferred month.
On Tuesday, CME July hogs 2LHN1 closed up 0.225 cent at 94.375 cents per lb, August 2LHQ1 was unchanged at 92.350, and October 2LHV1 was up 0.225 cent at 86.800.
