Cattle Futures Gain on Technicals, Cash Market Hopes

U.S. live cattle futures climbed more than 1 percent on Wednesday, rebounding after two straight sessions of declines on technical buying and hopes cattle fetch steady to higher prices this week in Plains cash markets, traders and analysts said.

Investors continued to exit positions in nearby cattle and lean hog futures and move into deferred contracts, on the fourth of a five-day roll for traders tracking the Standard & Poor's Goldman Sacks Commodity Index.

Short-covering in Chicago Mercantile Exchange October live cattle futures contributed to gains, with the contract settling up 1.275 cents to 107.550 cents per pound while December cattle was up 1.300 cents to 112.850 cents.

Some traders were optimistic beef packers who were enjoying huge profit margins will buy cattle near last week's cash sales of $105 per cwt. A small number of cattle sold at the online Fed Cattle Exchange auction at an average of $104.75 per cwt on Wednesday, according to the auction website.

"Cash (cattle) will be steady, maybe even $1 higher," said Cassie Fish, an analyst and author of blog The Beef.

She said there were signs that wholesale beef prices were nearing a seasonal low. Higher meat prices could entice packers to more aggressively bid for cattle.

Choice-grade wholesale beef prices were down 39 cents to $190.40 per cwt, the U.S. Department of Agriculture said. Beef packers were earning roughly $150 per cattle slaughtered, up from about $60 per head a month ago, according to advisory HedgersEdge LLC. 

Hogs Pare Losses

CME October feeder cattle futures were up 0.625 cent to 148.600 cents per pound, tracking the bigger gains in the more actively traded live cattle market.

CME October lean hog futures finished up 0.125 cents per pound, gaining slightly on bargain buying after the contract earlier tumbled to a roughly 11-month low. Most other hog contracts were narrowly lower, with December hogs finishing 0.325 cent lower at 56.775 cents.

Abundant supplies of U.S. hogs have weighed on prices for weeks.

Cash hog prices were down $1.06 to $54.78 per cwt in the key Iowa and Minnesota market and U.S. wholesale pork prices eased 11 cents to $80.30 per cwt, according to USDA data.