October 2, 2020

 

US cattle futures rise on beef demand

 

 

Analysts said signs of strong demand for beef and expectations of firm cash cattle trade this week gave way to the rise of live cattle futures in the United States, with December's contract reaching its highest in a month.

 

Commodity funds also appeared to be adjusting positions, ahead of the end of the month and quarter.

 

Jeff French, an analyst with Top Third Ag Marketing, said: "It's the second-to-last day of the month. I think a lot of funds are dressing up their long positions."

 

Chicago Mercantile Exchange (CME) October live cattle settled up US$0.950 at US$108.900 per pound and most-active December ended up US$1.475 at US$113.125 after reaching its highest since August 20 at US$113.550.

 

CME November feeder cattle finished US$2.675 higher at US$143.775 per pound.

 

One factor that fuelled the expectations that meat packers might pay feedlots more for market-ready cattle than they did last week was Packer margins staying at around US$300 per head.

 

"There were kind of consensuses that demand for beef is really good, surprisingly good, and that may embolden the feedlots to wait for better money," said Dan Norcini, an independent livestock trader.

 

"Demand for beef tends to pick up in October after a lull in September," French noted.

 

Prices of wholesale boxed beef were mixed on Tuesday, with choice cuts dropping US$0.56 to US$217.16 per cwt, while select cuts rose US$0.57 to US$206.99 per cwt, according to the US Department of Agriculture (USDA).

 

After strong advances this month, CME lean hog futures closed lower on profit-taking and now worries about ample US hog supplies.

 

CME October lean hog futures settled down US$0.325 at US$72.375 per pound while the most-active December contract tumbled US$2.050 to end at US$61.975.

 

Traders noted that the December hog contract was trading at a historically wide discount of more than US$0.10 cents to the October contract.

 

"That essentially tells you these guys think there are going to be a massive wall of hogs coming to the market," Norcini said.

 

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