Cattle futures rose Friday on the back of higher-than-expected cash-market prices.
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Meatpackers paid $108 per 100 pounds live for cattle in Kansas and Texas, several dollars above last week. Packers elsewhere raised their bids to $108 live and $170 to $172 dressed, market participants said, after holding out for lower prices through much of the week.
Analysts said the unexpected increase in cash bids suggested that packers were tighter on inventory of slaughter-ready cattle than previously thought. A higher trend this week would likely help solidify a cash-market turnaround, with prices bouncing from lows of around $104 earlier in September.
October live cattle futures rose 1.3% to $1.11575 a pound at the Chicago Mercantile Exchange, the highest close in over six weeks.
Traders were looking to the U.S. Department of Agriculture's monthly cattle on-feed and cold-storage reports at 3 p.m. EDT for updates on current and anticipated livestock and meat supply.
Analysts surveyed by The Wall Street Journal expect the agency to show the total number of cattle on-feed as of Sept. 1 up 3% from a year earlier. The agency will likely show the number of cattle placed in feedlots in August for fattening, a sign of supply in the months to come, down 3% from a year earlier. They expect to see cattle marketed in August, or sent to slaughterhouses, up 6%.
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Hog futures were sharply lower, pressured by downward momentum in the cash market. Meatpackers are slaughtering record numbers of hogs after two new processing plants opened earlier this month. Analysts say demand, particularly from exports, hasn't increased to absorb the extra pork supply, which is prompting declines in spot hog and meat prices.
Wholesale pork fell $3.28 to $73.04 per 100 pounds on Thursday before inching higher at midday Friday, with cash prices expected to continue falling into early next week.
Analysts see few bright spots in the near term.
"Packers are in a take no prisoners mode, smacking the cash lower now for four straight weeks," said Dennis Smith of Archer Financial Services. "There's also nothing good to report in the product prices continue to erode under the weight of record large production."
CME October lean hog futures fell 2.8% to 55.7 cents a pound.
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(END) Dow Jones Newswires
September 22, 2017 15:07 ET (19:07 GMT)