Cattle Futures Rise to Year High

By Benjamin Parkin Features Dow Jones Newswires

Cattle futures closed at their highest level in a year after prices rose at an online auction.

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Futures have rallied for 10 consecutive days to close the gap with cash prices, which have been buoyed by strong consumer demand for beef.

April live cattle futures rose 0.9% to $1.27925 a pound at the Chicago Mercantile Exchange. That was the highest close for a front-month contract since April 18 last year.

Cash prices at Wednesday morning's Fed Cattle Exchange auction, meanwhile, averaged at $1.29 a pound, as packers bought 701 cattle. That was a marked improvement from the previous week, where 120 cattle moved at a going rate of $1.26 a pound.

The U.S. Department of Agriculture reported that more cash trade took place in the southern plains. Prices ranged from $1.30 to $1.32 a pound, gains of as much as 4 cents a pound from last week.

That could give futures prices further room to rally as traders try to meet going rates on the cash markets, analysts say.

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"There is nothing to indicate a near-term top has been put in," said Troy Vetterkind of Vetterkind Cattle Brokerage, adding that high prices would likely continue to be supported despite any near-term setbacks.

Hog futures fell for a third consecutive day, with the CME June lean hog contract dropping 2.2% to 69.950 a pound. That is the lowest close for June futures since Oct. 21.

Prices on the cash market are into their fourth week of decline, ending Tuesday at 55.24 cents a pound, compared with highs of more than 67 cents in mid-March.

Growing inventories of hogs have given packers the ability to dictate price levels, analysts say, but processing margins of above $30 a head created the potential for a reversal.

"We have seen a lot of pressure in the hog market and we are due for a bounce," said Craig Turner, a broker at Daniels Trading.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

April 19, 2017 15:32 ET (19:32 GMT)