By Theopolis Waters
CHICAGO, Sept 23 (Reuters) – Chicago Mercantile Exchange live cattle futures climbed on Monday, the first trading session after the U.S. Department of Agriculture released data that confirmed tight supplies in the months ahead
The report showed the number of cattle placed in U.S. feedlots in August dropped 11 percent from a year earlier to their lowest level for that month in 17 years
The government’s monthly cattle data confirms already tight supplies and fewer animals coming to market through next year, analysts and traders said
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The data showed beef stocks in August totaled 433.8 million lbs. That was down 28.8 million, a record decline in August from July
The total was up 1 million lbs from a year ago due to higher cattle weights. But fewer cattle this year than last year and robust U.S. beef exports drew down beef stocks in August, said independent market analyst Bob Brown
Investors said Monday morning’s firm wholesale beef prices, and higher cash cattle values last week, suggest both markets have forged a seasonal bottom
USDA data Monday morning showed the wholesale choice beef price, or cutout, at $193.09 per hundredweight (cwt), up 70 cents from Friday. Select cuts were 49 cents higher at $176.45
Last week, cash cattle in Texas and Kansas fetched $124 per cwt, which was $1 higher than the previous week, feedlot sources said. Live-cattle in Nebraska a week ago moved at $125, up $1 to $1.50 from the week before
Traders are waiting for feedlots to count the number of animals available for this week
Live cattle October closed up 0.650 cent per lb at 126.600 cents. December finished 0.750 cent higher at 130.500 cents
Feeder futures closed higher with support from CME live cattle advances and anticipation of tighter feeder cattle supplies
Spread traders bought October futures and sold the September contract ahead of its expiration on Sept. 26
September ended 0.525 cent per lb higher at 157.625 cents. October settled 1.875 cents higher at 162.100 cents
HOGS FIRM ON DISCOUNT CME hogs’ discount to the exchange’s hog index, which was at 98.05 cents, underpinned the October contract, traders said
October hogs finished up 0.125 cents per lb at 90.175 cents, and December at 86.425 cents, 0.350 cent higher
“People are going to chase (buy) October as long as the index keeps going up,” a trader said
Uncertainty about cash hog prices in the near term limited futures’ advances
Some processors cut slaughter to counter current tight supplies, which returned packer margins back in the black
HedgersEdge.com estimated U.S. pork packer margins on Monday at a positive $5.50 per head, compared with a negative $2.20 on Friday and a negative $0.95 a week ago
Pork packers on Monday processed 419,000 hogs, 9,000 less than last week and 15,000 fewer than a year ago, according to USDA
Spread traders bought December futures and sold October and February contracts
And speculative buyers purchased deferred CME hogs in the belief that the spread of the Porcine Epidemic Diarrhea virus (PEDv), first reported in May and which is deadly to baby pigs, can reduce supplies in the coming months
August pork stocks totaled 540.0 million lbs, down 3.7 million lbs from the month before and a 45.8 million lb drawdown from a year earlier, according to USDA
Hog production this year was relatively small compared with last year, said Allendale chief strategist Rich Nelson
Most of the year-over-year decline in pork stocks were tied to cuts popular with summer grilling, analysts said.
