Cattle Futures Recover From Sell-Off; Hogs Steady

By Benjamin Parkin Features Dow Jones Newswires

Live cattle futures rebounded on Wednesday from a steep reversal earlier in the week, closing higher during a volatile session.

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Live cattle contracts for June delivery rose 0.8% to $1.312 a pound at the Chicago Mercantile Exchange, while August feeder cattle futures slid 0.4% to $1.548 on the back of higher feedgrain prices.

Futures on Tuesday touched a peak from early May before selling off sharply. But analysts said that higher wholesale beef prices helped steady prices on Wednesday.

"Right now we're testing the highs and we're consolidating," said Josh Steinhilber, a broker at CattleHedging.com in Denver, Colo. "We're still holding this long-term uptrend."

The week's cash trade got off to a choppy start after the morning's online Fed Cattle Exchange auction was postponed to Thursday due to technical issues. The U.S. Department of Agriculture reported some cattle sales on the cash market in Nebraska for $1.35 a pound.

With beefpacker margins still well into the triple digits per head, analysts expect the 11am ET auction to set the trend for higher cash prices this week.

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But Mr. Steinhilber said the accompanying rally in beef prices, which rose to $2.51 a pound in the morning according to the USDA, could imperil demand for the red meat among consumers going into the summer grilling season.

"We get up to these levels and we start competing with crab and lobster. That's not a good thing," he said, evoking the $6-a-pound ground beef sold during a previous 2014 spike. "We're going to have problems with demand."

Hog futures were steady as traders consolidate around a recent top. CME June lean hog futures were little changed at 81.625 cents a pound, while the cash trade continued to close the gap to futures. Cash prices rose to 77.35 cents a pound on Wednesday, with dealers expecting sales as much as 2 cents higher in the day's trade.

Wholesale pork prices also rose by over a cent to 90.45 cents a pound. Analysts say that, in the face of high beef prices, pork could stand to benefit at the retail counter.

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

(END) Dow Jones Newswires

June 07, 2017 16:00 ET (20:00 GMT)