LIVESTOCK-Cheaper corn drives U.S. feeder cattle to all-time high

Tue Oct 8, 2013 6:53pm EDT

By Theopolis Waters
    CHICAGO, Oct 8 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures on Tuesday hit the highest level
ever at 164.950 cents per lb, driven by cheaper feed that could
encourage feedlots to buy young cattle.
    Chicago Board of Trade corn for December delivery 
settled down 7-1/2 cents at $4.41-3/4 a bushel after reports of
better-than-expected yields from the ongoing harvest in the U.S.
Midwest.
    Firm CME live cattle and steady-to-higher prices for feeder
cattle in local markets contributed to the advance in futures,
traders said.
    October feeder cattle ended 0.800 cent per lb higher
 at 164.800 cents. It spiked to a contract high of 164.950 cents
in electronic trading earlier in the session. 
    November settled at 166.325 cents, up 0.850 cent.
   
    LIVE CATTLE UP WITH CASH HOPES        
    CME live cattle finished moderately higher as investors
bought October and sold deferred months in anticipation of
steady-to-higher cash prices this week, traders and analysts
said.
    They cited the seasonal improvement in wholesale beef demand
and fewer cattle available for sale as supportive cash cattle
influences.
    October closed up 0.400 cent per lb at 128.275 cents
while December finished at 132.325 cents, up 0.025 cent.
    Last week, cash-basis cattle in the U.S. Plains traded at
$125 to $126 per hundredweight (cwt). 
    Tuesday's wholesale choice beef price, or cutout, was up 26
cents per cwt from Monday to $192.59. The select price gained 37
cents to $177.80, according to analytical market research firm
Urner Barry.     
    Some packers have curtailed slaughter to strengthen their
weak margins and lift wholesale beef values.
    Urner Barry estimated Tuesday's cattle slaughter at 122,000
head of cattle, 1,000 less than last week and 5,000 fewer than a
year ago. 
    The prospect that more affordable feed could increase cattle
production pressured deep-deferred live cattle contracts.

    TWO-TIERED HOG TRADE ON SPREADS     
    Some traders sold CME hog spot October futures and bought
deferred months amid uneasiness about how that contract will
settle when it expires on Oct. 14.
    The CME Group Inc on Monday detailed how it will
determine the final settlement price for the October 2013 lean
hog contract next week if the U.S. government shutdown
continues. 
    Spot October also felt pressure from increased hog supplies
which could drag down cash prices and wholesale pork values.
    And speculative traders bought the December contract with
the view that the USDA's recent quarterly hogs report did not
factor in losses from the Porcine Epidemic Diarrhea virus
(PEDv), which is deadly to baby pigs. 
    Spot October finished at 91.225 cents per lb, down
0.375 cent. December closed up 0.325 cent at 88.200
cents.
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