CHICAGO, Nov 16 (Reuters) – Chicago Mercantile Exchange live cattle futures on Wednesday reached their highest level in two months, driven by fund buying and better-than-expected cash prices, said traders.
December live cattle closed up 2.725 cents per pound to 108.200 cents, and February ended 1.975 cents higher at 108.500 cents.
On Wednesday packers paid $106 to $109 per cwt for slaughter-ready, or cash, cattle that a week ago sold at mostly $105.
Up to $108.25 per cwt cattle traded at Wednesday morning’s Fed Cattle Exchange led the cash and futures charge, a trader said. Animals there last week brought $103 to $104.25 per cwt.
He said fewer cattle for sale than last week and the potential turnaround in beef demand ahead of the winter holidays contributed to market gains.
Investors linked some of future’s rally on Wednesday to positioning ahead of Friday’s U.S. Department of Agriculture monthly Cattle-On-Feed report.
On average, most analysts believe fewer animals landed in feedlots last month than last year.
Soft corn prices and sharply higher CME live cattle futures sent feeder cattle contracts higher for a seventh consecutive session.
November feeders, which will expire on Thursday, finished up 0.375 cent per lb to 126.975 cents. Most actively traded January ended 2.300 cents higher at 125.325 cents.
CME lean hogs drew strength from short-covering led by Wednesday’s morning wholesale pork price surge, said traders.
They said buying in the exchange’s neighboring cattle markets provided additional support to hog futures.
December closed 1.900 cents per pound to 48.025 cents, and February ended 1.625 cents per pound higher at 54.525 cents.
The morning’s wholesale pork price, or cutout, on Wednesday jumped $2.04 per cwt from Tuesday to $76.18, ignited by almost $8 higher rib prices, the USDA said.
The pork cutout was better than expected and seasonal indicators suggest cash hog prices tend to bottom out around this time of year, said Allendale Inc chief strategist Rich Nelson.
But packers may need fewer animals in the near-term while preparing to close plants for at least two days over the Thanksgiving holiday.
Wednesday morning’s average cash hog price in Iowa/Minnesota fell 84 cents per cwt from Tuesday to $41.29, the USDA said.