CHICAGO, Jan 13 (Reuters) – Chicago Mercantile Exchange live cattle futures gained about 1 percent on Friday, rallying from losses in the previous session on the back of investment fund buying and optimism for higher prices in U.S. Plains cash cattle markets, traders said.
Feeder cattle prices rose while lean hogs were mostly higher, underpinned by fund rebalancing, short-covering and strong cash hog markets.
Traders were awaiting for deals to develop in cash cattle markets following stronger prices earlier this week at the online Fed Cattle Exchange auction.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
CME February live cattle finished 1.050 cents higher at 118.525 cents per pound and the April contract was up 1.450 cents to 117.925 cents. CME March feeder cattle climbed 1.550 cents to 129.300 cents per lb.
“Overall, feedyards are really current and therefore the cash should stay elevated,” Schwieterman Inc broker Domenic Varricchio said of relatively tight supplies of cattle available for slaughterhouses.
Winter storms forecast in the coming days in the Plains could also disrupt shipments of animals or slow the rate of weight gains in bitter-cold temperatures.
“Weights might drop off if this winter storm is bad,” Varricchio added.
The Commodity Futures Trading Commission after the close of trading said speculative investors, including hedge funds, increased their net longs in both live cattle and lean hog futures, and slightly reduced their feeder cattle net long.
Investors were rolling out of front-month contracts in all three livestock contracts this week, with long liquidation prompting losses on Friday in front-month February lean hogs.
CME February hogs settled 0.350 cent lower at 65.600 cents per pound. CME April hogs gained 0.075 cent to 69.825 cents while all other deferred hog contracts were either slightly higher or unchanged.
The U.S. Department of Agriculture said lean hog prices in the key market of Iowa and southern Minnesota gave back a portion of their recent gains, easing 34 cents to an average price of $62.12 per cwt.
CME livestock futures trading will be closed on Monday for the U.S. holiday Martin Luther King Jr. Day.
