CHICAGO – Cattle futures inched higher to extend multiweek gains, while a government report showed a large supply of cattle in the U.S.
Continue Reading Below
The U.S Department of Agriculture's cattle-on-feed report was largely in line with expectations. Total cattle and calves on feed for the slaughter market for feedlots numbered at 10.9 million head as of April 1, slightly above a year ago.
Placements in commercial lots in March rose to 2.1 million head, 11% higher than last year. Analysts surveyed by the Wall Street Journal were expecting a 7.5% increase.
"Bottom line is that this will shake the trade a little bit," said Rich Nelson, chief strategist at brokerage Allendale Inc.
Feedlots, meanwhile, marketed 10% more cattle to beef processors in March than the same time last year, just above expectations.
The increase in cattle marketed or sold was evidence of how aggressively feedlots have been taking advantage of high cash prices to sell to packers, said Trey Warnock, an analyst at Amarillo Brokerage in Texas.
Continue Reading Below
Those high prices have encouraged feedyards to sell their cattle at lower weights ahead of time, keeping supplies tight, Mr. Warnock said.
"As we look across the last couple of months, every week we got down the road we were a little tighter than we thought we would be," he said.
Since hitting a seasonal peak in mid-March, prices in the cattle complex have surprised traders by rallying again. Trading on the cash market rose this week too, ranging from $1.28 to $1.33 a pound, with highs of $1.35.
Coupled with rising beef prices, that has encouraged traders to rally cattle futures to levels last seen a year ago. Futures contracts have risen for 12 consecutive days, ending Friday's session at the Chicago Mercantile Exchange 0.1% higher at $1.29800 a pound.
Traders are faced with a very different situation in the hog market, however. Hog and pork prices have slid or stagnated in recent months as large supplies weigh on values. Cash hog prices set the pace, falling every day so far since March 22. Analysts say ample inventory has allowed pork packers to dictate lower going rates, increasing their margins.
"There's simply no competition for inventory," said Dennis Smith, a broker at Archer Financial Services.
CME June lean hog futures closed 0.5% lower at 68.325 a pound.
Write to Benjamin Parkin at firstname.lastname@example.org
(END) Dow Jones Newswires
April 21, 2017 15:53 ET (19:53 GMT)