October 11, 2013 / 8:24 PM / 4 years ago

LIVESTOCK-More US feeder cattle hits new highs amid tight supply

* Cash price optimism lifts CME live cattle
    * Most hog futures slip on fund liquidation

    By Theopolis Waters
    CHICAGO, Oct 11 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures rose to new highs for a second
straight session on Friday fueled by a  shortage of supplies,
traders and analysts said.
    October feeder cattle ended 1.550 cents per lb
higher at 167.475 cents. It earlier hit a new contract high of
168.475 cents in electronic trading. 
    November settled at 169.275 cents, up 1.350 cents
after making a new contract high of 169.725 cents.
    The decline in young cattle was attributed, in part, to
multi-year U.S. droughts that have hurt crops and driven up feed
    CME feeder cattle drew support from the three-year slide in
Chicago Board of Trade corn futures as the Midwest autumn crop
harvest kicks into high gear. 
    More affordable feed will help ease input costs for feedlot
operators, allowing them to purchase young cattle.
    CBOT corn for December delivery settled down 5 cents
at $4.33-1/4 a bushel. 
    Some traders cited speculators buying CME feeder cattle in
the belief that South Dakota ranchers hit by last weekend's
record blizzard are replenishing their herds.
    "I'm not buying that scenario," a trader said. "Folks there
are more concerned about cleaning up after the storm and trying
to find their stray cattle than rebuilding their herds." 
    CME live cattle gained after traders bought the October
contract in anticipation of steady to higher cash prices this
    Expectations for tight supplies through the end of the year
boosted December futures to its highest level in eight months.
    Live cattle October closed 0.500 cent per lb higher
at 128.800 cents while December finished at 132.475
cents, up 0.300 cent.
    Despite poor margins, packers could pay at least steady
money for cattle given fewer animals up for sale, analysts and
traders said.
    "I think we're at that point where everybody has been
looking for that hole, or drop off, in cattle numbers. I think
we've just stepped into that hole," said CHS Hedging analyst
Steve Wagner.
    Cash cattle bids in the U.S. Plains were at $124 per
hundredweight (cwt) against asking prices of $128 and higher,
feedlot sources said. Cash-basis cattle a week ago fetched $125
to $126.
    Analytical market-research firm Urner Barry estimated this
week's cattle slaughter at 623,000 head, 5,000 less than a week
ago and 10,000 fewer than a year earlier for the same period. 

    Other than CME spot October hogs, remaining contracts
finished weaker.
    The spot October hog contract was led by speculation about
at what price will the spot month settle after it expires on
Monday Oct. 14.
    Spot October finished at 90.750 cents per lb, 0.500
cent higher.    
   CME Group Inc said it will increase lean hog futures
surveillance next week to prevent price manipulation under a
pricing formula the exchange adopted to cope with the shutdown
of the U.S. government.     
    Anticipation of increased supplies in the near term and fund
liquidation pressured deferred hog trading months.
    Urner Barry estimated this week's hog slaughter at 2.275
million head, 71,000 more than a week ago for the same period.  
    Most-actively traded December hogs closed down 0.150
cent at 86.500 cents and February ended at 88.900 cents,
0.400 cent lower.
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