November 11, 2019 / 10:50 PM / a month ago

LIVESTOCK-Cattle futures extend rally to multi-month highs

CHICAGO, Nov 11 (Reuters) - U.S. live cattle and feeder futures reached their highest prices since spring on Monday, supported by strong beef prices, traders said.

Beef prices have increased recently due to firm demand, helping push up margins for processing companies such as Tyson Foods Inc and JBS USA.

Estimated margins rose to $365.30 per head from $326.25 a week ago, according to livestock marketing advisory service

“We had a raging wholesale beef market and strong packer margins,” said Rich Nelson, chief strategist for Illinois-based broker Allendale.

Chicago Mercantile Exchange (CME) February live cattle touched their highest price since April 23 before finishing up 0.650 cent at 125.675 cents per pound. January feeder cattle set their highest price since May 10 and ended up 1.250 cent at 147.125 cents per pound.

Processing margins have stayed high since a fire shut a Tyson Foods plant in Kansas in August, raising concerns about beef supplies. Tyson is set to report quarterly earnings on Tuesday.

Wholesale choice boxed beef cutout values gained 2.5% last week, although they eased a bit on Monday, according to data from the U.S. Department of Agriculture. Values for select cuts rose further after gaining 2.8% last week.

In the pork market, nearby hog futures slipped under pressure from uncertainty about the U.S.-China trade war, which has hampered sales of American pork, traders said. China, the world’s top pork consumer and producer, has imposed hefty tariffs on imports of U.S. pork because of the dispute.

U.S. President Donald Trump raised doubts over the weekend about whether there had been an agreement to roll back tariffs as part of an interim trade deal.

China needs pork imports as a fatal hog disease has decimated its herd, but retaliatory tariffs on U.S. pork have importers paying duties of up to 72% on U.S. shipments.

“To get serious buying done, we need China to lift these tariffs,” Nelson said.

CME December lean hogs reached their lowest price since Sept. 11 and ended down 0.825 cent at 63.300 cents per pound. February hog futures eased 0.175 cent to 73.725 cents per pound. (Reporting by Tom Polansek in Chicago Editing by Tom Brown)

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