Cattle, hog futures bounce back after recent losses - CME
Futures collapsed following USDA report
26 October 2023
2 minute read
By: Cattle futures jumped at the Chicago Mercantile Exchange (CME) on Wednesday, bouncing off June lows hit this week on larger-than-expected US supply numbers, reported Reuters.
Futures prices collapsed on Monday after the US Department of Agriculture (USDA), in a report issued after markets closed on Friday, said that producers placed more cattle than expected into US feedlots in September.
"Monday's washout was probably a bit overdone," said Matt Wiegand, commodity broker for FuturesOne.
CME December live cattle settled up 0.800 cent at 179.425 cents per pound on Wednesday. February live cattle finished 0.650 cent stronger at 181.500 cents per pound.
January feeder cattle rose 1.700 cents to 236.550 cents per pound.
Large placements of cattle in September surprised some analysts because US cattle inventories have dropped to their lowest levels in decades after drought raised costs for feed.
But Friday's data indicates the US could eventually be headed for tighter cattle supplies and higher prices because producers are not yet holding back heifers from feedlots and slaughtering, analysts said. Retaining heifers would allow them to reproduce to rebuild the US herd, they said.
"If we're not retaining heifers, that could leave us even tighter on the back end," Wiegand said.
In CME's lean hog market, February and April futures set contract lows for the fourth consecutive day before settling higher. The market was oversold, analysts said.
Most-active December hogs edged up 1.125 cents to finish at 67.500 cents per pound after hitting a contract low on Friday.
The US Department of Agriculture (USDA) estimated average hog weights were 285.2 pounds in Iowa and southern Minnesota in the week ended Oct. 21, up from 283.5 pounds a week earlier.
Separately, the USDA said frozen pork supplies at the end of September were 14% lower than a year earlier, while stocks of pork bellies were down 19%.
On Thursday, traders will review weekly US pork and beef export sales data.
