CHICAGO, Oct 14 (Reuters) - U.S. live cattle futures rose more than 1% on Monday, with the benchmark December contract touching a 2-1/2-month top after cash cattle traded late last week about $2 per cwt higher than the previous week, traders said.
The five-area average price for cash cattle last week was just above $109 per cwt, according to the U.S. Department of Agriculture, up from about $107 a week earlier.
“Some of the trades done over the weekend were higher than people were thinking,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.
Chicago Mercantile Exchange December live cattle futures settled up 1.300 cents at 113.450 cents per pound after reaching 113.725 cents, near the contract’s 200-day moving average and its highest level since Aug. 1.
CME November feeder cattle futures settled up 1.825 cents at 146.075 cents per pound.
Strong wholesale beef prices added to bullish sentiment. The USDA quoted choice boxed beef cutout on Monday afternoon at $217.22 per cwt, up $1.56 from Friday, while select cutout rose $0.65 to $189.33.
“The fact that the beef cutout has held together as well as it has, and continues to gain ground, is supportive,” Kalo said, noting the strength in values for choice cuts.
“If you’re a packer and you are seeing better value for that part of the animal, it’s always positive and it makes you more confident to go out there and bid on cattle,” Kalo said.
CME lean hog futures closed mixed, with the most-active December contract closing lower on plentiful near-term hog and pork supplies, while other months firmed on expectations of increased export demand.
Traders were cautious about news that the United States and China on Friday agreed to the first phase of a deal to end a trade war, prompting President Donald Trump to suspend a threatened tariff hike. The announcement did not include many details, and Trump said it could take up to five weeks to get the deal written.
China, the world’s top pork consumer, is expected to step up pork imports. China’s pig herd in September was 41.1% smaller than it was a year earlier, the agriculture ministry said on Monday, as a year-long African swine fever epidemic continued to slash the world’s largest herd.
“The (U.S. hog futures) market has a bullish bias to it for next year, in anticipation of more exports. But there is more uncertainty in the short term,” Kalo said.
“We have a lot of pork in the pipeline ... So we need to see big exports,” Kalo said.
Chicago Mercantile Exchange benchmark December lean hog futures settled down 0.475 cent at 69.125 cents per pound while February hogs ended up 0.200 cent at 77.250 cents. (Reporting by Julie Ingwersen Editing by Tom Brown)