By Theopolis Waters
CHICAGO, Aug 30 (Reuters) – Chicago Mercantile Exchange feeder cattle futures rose on Friday as forecasts for good crop weather pushed futures to their highest level since June 18, 2012, traders said.
The prospect of a record corn harvest in the fall extended CME feeder cattle gains for seventh straight week and a fifth month in a row.
Investors bought feeder cattle futures in the belief feedyards would buy more young cattle if feed costs continue do decline.
September feeder cattle closed at 156.925 cents, up 0.700 cent per pound. October finished at 158.950 cents, 0.950 cent higher.
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MIXED, CHOPPY CATTLE FUTURES
CME live cattle settled mixed after a choppy session. Investors adjusted positions on the final trading day of the month and before the Labour Day holiday.
Spot-August live cattle, which expired at noon CDT settled 0.850 cent per lb. lower at 122.700 cents. It fell below the 20-day moving average level of 123.05 cents as sellers out numbered buyers.
October, the new lead contract, closed at 126.800 cents, down 0.175 cent, while December ended up 0.225 cent to 130.475 cents.
October felt pressure from its premium to Friday’s cash cattle prices, analysts and traders said.
Cash cattle in Texas and Kansas fetched $123 per hundredweight which was steady with last week, feedlot sources said.
Packers kept a lid on cash values with plants scheduled to be closed on Monday for Labour Day.
Analysts and trader said the prospect of a seasonal uptrend in cash prices underpinned December live cattle futures.
HOGS UP WITH FUTURES’ DISCOUNT
CME hogs’ discount to the exchange’s hog index, which was at 94.20 cents, encouraged futures buyers, analysts and traders said.
Hog futures were up nearly three percent for the week on fund buying, but fell 10 percent for the month as cash hog prices turned mostly lower.
October closed at 87.625 cents per lb., up 0.300 cent. December finished 0.450 cent higher at 84.750 cents.
The U.S. Department of Agriculture on Friday afternoon quoted the average hog price in the Iowa/Minnesota market $1.07 per cwt. higher than Thursday at $88.34, but down 25 cents to $86.10 in the eastern Midwest.
Some packers raised cash hog bids to cover production after Labour Day, including an expected big Saturday slaughter, traders and analysts said.
Other processors have all the hogs they need given the seasonal increase in supplies.
Investors wait to gauge meat demand from grocers following the long holiday weekend, which marks the end of the summer grilling season.
USDA Friday afternoon showed the wholesale pork price at $94.96 per cwt., $2.07 lower than Thursday. The price decline was led by the $6.52 per cwt. drop in rib values, a staple at backyard cookouts.
