August 1, 2018 / 9:17 PM / 3 months ago

LIVESTOCK-Feeder cattle jump as corn costs decline; hogs extend losses

    By Michael Hirtzer
    CHICAGO, Aug 1 (Reuters) - U.S. cattle futures jumped over 1
percent on Wednesday, with feeder cattle prices         leading
the way higher after corn futures fell, traders and analysts
said.
    Feed costs are a top expense for fattening cattle and
Chicago Mercantile Exchange feeder cattle surged as corn futures
turned lower from a roughly 1-1/2 month high.
    CME September feeder cattle        finished up 2.375 cents
at 151.950 cents per pound, rising for the first time in three
sessions and notching the biggest daily gains since July 18.
More actively traded CME October live cattle        finished up
0.975 cent to 110.275 cents per pound.
    Some traders exited earlier short positions in feeder cattle
as corn prices turned lower, said Domenic Varricchio, consultant
at Roach Ag Marketing Ltd.
    "It was a good, old fashioned short squeeze in feeders ...
and that's directly related to the corn trade," Varricchio said,
adding that live cattle futures had comparatively smaller gains
due to weaker trades in cash cattle markets.
    On the Fed Cattle Exchange online weekly auction, more than
1,000 cattle sold for an average price of about $110 per cwt.
That compares to cash cattle trades last week in the U.S. Plains
of about $112 and light trades this week of $109 to $110.
    Lean hog futures         remained under pressure from
abundant supplies, lower prices for cash hogs and for pork, and
tariffs on U.S. pork imports in Mexico and China.
    The August        and October        hog contracts fell to
lifetime lows for the second straight session. August hogs 
finished down 0.875 cent at 60.250 cents per pound while October
hogs recovered to end up 0.050 cent at 50.775 cents.
    Packers have scaled back slaughter rates slightly in efforts
to protect their profit margins as prices for both pork and beef
have declined seasonally following a series of U.S. summer
holidays that generally result in increased meat sales for
outdoor grilling.
    Wholesale U.S. pork prices eased 18 cents to $73.87 per cwt
and choice-grade beef was down 52 cents to $203.75, according to
the U.S. Department of Agriculture.                    
    Pork packer margins were estimated at $21.85 per hog, up
from $16.80 a week ago, and beef packer margins at $121.70 per
cattle, down from $132.80 a week ago, according to HedgersEdge
LLC.        
    "(Packers) know there's too many hogs," Varricchio said.

 (Reporting by Michael Hirtzer
Editing by Tom Brown)
  
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