Cattle Futures Hit Six-Week High
September 20 2017 - 3:19PM
Dow Jones News
By Benjamin Parkin
Cattle futures touched their upper daily limit on Wednesday,
hitting a six-week high as cash-market prices rose.
Meatpackers bought 636 head of cattle at the weekly online Fed
Cattle Exchange on Wednesday morning for an average of $106.67 per
100 pounds, up from $104.75 last week. That was also higher than
last week's total cash trade average of $105.84, according to the
U.S. Department of Agriculture.
Traders were betting that cash prices would continue rising in
follow-up trade this week, cementing a seasonal turnaround as
supplies of slaughter-ready cattle ease. Analysts expect the USDA
to show the rate of cattle placed in feedlots for fattening to fall
from a year earlier in a monthly report on Friday. That would be an
indication of tighter supplies in the coming months.
Analysts said cattle futures found added buying interest on
Wednesday after breaking through technical support levels.
"We got a buy signal and the technicals supported it," said Lon
Malmkar, a broker at FuturesOne in Lincoln, Neb. "The market
decided that it was time to go the other direction."
October live cattle futures rose 2.8% to $1.1095 a pound at the
Chicago Mercantile Exchange, popping through a technical ceiling of
$1.10 to close at the highest point since Aug. 8. CME September
feeder cattle futures rose 1.6% to $1.53975 a pound, a two-month
high.
Hog futures were mixed. The front-month October contract tumbled
2.5% to 58.65 cents a pound while the deferred December and
February contracts rose.
Analysts said the divergence between near-month and later-month
futures came amid a negative short-term outlook for slaughter-ready
hog prices. Meatpackers have paid lower cash prices every day since
Sept.1, with bids also expected lower on Wednesday.
Traders were betting that cash prices would rebound later this
year, however. A rise in processing capacity, as a number of new
slaughter houses open, could lift prices as packers pay more to
secure supply for the new facilities.
"Cash has got to stop going down before most people decide to
get long," Mr. Malmkar said.
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
September 20, 2017 15:04 ET (19:04 GMT)
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