CME cattle futures rise on larger-than-expected weekly slaughter
By Julie Ingwersen
CHICAGO, Aug 19 (Reuters) - Chicago Mercantile Exchange live
cattle futures closed higher on Monday after U.S. government
data showed last week's hog slaughter was bigger than the
previous week's, despite a fire that shuttered a Kansas beef
The U.S. Department of Agriculture estimated the weekly U.S.
cattle slaughter through Saturday at 651,000 head, up from
642,000 head the previous week.
The increase followed an Aug. 9 fire that damaged a Tyson
Foods meat processing plant in Holcomb, Kansas. Analysts
had predicted the plant would be shut down for months, reducing
demand for cattle.
The USDA's slaughter data was supportive to futures,
indicating that the loss of the Kansas plant might not be as
significant as initially feared.
"It tells us that some of the lost capacity from the Tyson
plant did get diverted into other plants," said Don Roose,
president of Iowa-based U.S. Commodities.
However, gains in CME cattle futures eroded throughout
Monday's session, with some traders questioning whether the
strong slaughter pace would continue.
"There is no way the packers are going to gear this thing up
and work everybody triple-hard, and do double shifts on
Saturdays. It's not their responsibility to keep the industry
current," said Dennis Smith, a commodity broker with Archer
Financial Services in Chicago.
"They will pick up the kill a little bit. Margins are good
and the incentive is there to do that, but eventually they will
lower the bid," Smith said.
CME October live cattle ended up 0.175 cent at 98.225
cents per pound. CME October feeder cattle futures
settled up 0.325 cent at 133.175 cents per pound.
CME lean hog futures closed higher, with the most-active
October contract jumping nearly 4% in a technical bounce
after Friday's limit-down close. Lean hogs had tumbled last week
on uncertainty about potential purchases from China due to its
ongoing trade fight with the United States.
"Just volatile swings," Smith said of the futures market.
CME October hogs settled up 2.025 cents at 64.025
cents per pound.
Smith noted that while U.S. pork production is higher than
2018 on a year-to-date basis, the October hog contract is
trading roughly 7 cents per pound higher than where the October
2018 contract traded at this time a year ago.
(Reporting by Julie Ingwersen in Chicago
Editing by Matthew Lewis)
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.