September 7, 2017 / 8:08 PM / in 10 months

LIVESTOCK-Spreads help drive up CME live cattle futures

    * Feeder cattle ends sharply higher
    * Lean hog contracts settle lower

    By Theopolis Waters
    CHICAGO, Sept 7 (Reuters) - Chicago Mercantile Exchange live
cattle closed higher on Thursday after investors bought October
futures and simultaneously sold deferred months in a trading
strategy known as bull spreads, traders said.
    Some market participants, also through spreads, purchased
live cattle futures and at the same time sold CME lean hog
    There are bullish signals that market-ready, or cash, cattle
may be close to bottoming out, while cash hog prices have
tracked lower, said traders.
    "Rather than go flat out long cattle, which is a little
riskier, (funds) were long cattle and short hogs," said CHS
Hedging analyst Steve Wagner.
    On Thursday packer bids for cash cattle in Nebraska and
Texas were $101 and $102 per cwt, respectively, versus at least
$107 asking prices, said feedlot sources. Last week cash cattle
in the U.S. Plains brought $103 to $105.
    Extremely profitable packer margins and improved wholesale
beef values bode well for cash prices.                   
    But processors will resist paying more for supplies given
ample numbers of cattle that have become heavier as temperatures
moderate in the Plains, allowing animals to grow quicker.
    The U.S. Department of Agriculture's monthly meat export
data showed July U.S. beef exports at 239.4 million pounds, up
slightly from June and 10 percent higher than a year ago.
    Some live cattle trading months broke through technical
resistance levels, which triggered fund buying.
    October         live cattle finished 1.525 cents per pound
higher at 106.225 cents, and above the 10-day moving average of
106.025 cents. December         closed 1.325 cents higher at
111.125 cents.
    Weaker corn prices and higher live cattle futures boosted 
CME feeder cattle contracts.
   September         closed 2.250 cents per pound higher at
145.550 cents.
   Slumping cash hog prices and softer wholesale pork values
amid abundant supplies of heavier animals pressured CME lean hog
futures, said traders.
    Fund liquidation, spreading out of hogs into cattle and
disappointing U.S. pork export data contributed to hog futures'
losses, they said.
   October         ended 2.100 cents per pound lower at 61.450
cents, and December         finished 2.000 cents lower at 58.275
    Both contracts settled below their respective 10-day moving
average of 62.165 and 58.392 cents.
    USDA put July pork exports at 390.3 million pounds, down
13.0 percent from a month earlier and down 3.8 percent from a
year ago.

 (Reporting by Theopolis Waters; Editing by Meredith Mazzilli)
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