Cattle Futures Rise as Hogs Tumble
September 22 2017 - 3:22PM
Dow Jones News
By Benjamin Parkin
Cattle futures rose Friday on the back of higher-than-expected
cash-market prices.
Meatpackers paid $108 per 100 pounds live for cattle in Kansas
and Texas, several dollars above last week. Packers elsewhere
raised their bids to $108 live and $170 to $172 dressed, market
participants said, after holding out for lower prices through much
of the week.
Analysts said the unexpected increase in cash bids suggested
that packers were tighter on inventory of slaughter-ready cattle
than previously thought. A higher trend this week would likely help
solidify a cash-market turnaround, with prices bouncing from lows
of around $104 earlier in September.
October live cattle futures rose 1.3% to $1.11575 a pound at the
Chicago Mercantile Exchange, the highest close in over six
weeks.
Traders were looking to the U.S. Department of Agriculture's
monthly cattle on-feed and cold-storage reports at 3 p.m. EDT for
updates on current and anticipated livestock and meat supply.
Analysts surveyed by The Wall Street Journal expect the agency
to show the total number of cattle on-feed as of Sept. 1 up 3% from
a year earlier. The agency will likely show the number of cattle
placed in feedlots in August for fattening, a sign of supply in the
months to come, down 3% from a year earlier. They expect to see
cattle marketed in August, or sent to slaughterhouses, up 6%.
Hog futures were sharply lower, pressured by downward momentum
in the cash market. Meatpackers are slaughtering record numbers of
hogs after two new processing plants opened earlier this month.
Analysts say demand, particularly from exports, hasn't increased to
absorb the extra pork supply, which is prompting declines in spot
hog and meat prices.
Wholesale pork fell $3.28 to $73.04 per 100 pounds on Thursday
before inching higher at midday Friday, with cash prices expected
to continue falling into early next week.
Analysts see few bright spots in the near term.
"Packers are in a take no prisoners mode, smacking the cash
lower now for four straight weeks," said Dennis Smith of Archer
Financial Services. "There's also nothing good to report in the
product… prices continue to erode under the weight of record large
production."
CME October lean hog futures fell 2.8% to 55.7 cents a
pound.
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
September 22, 2017 15:07 ET (19:07 GMT)
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