Cattle Futures Surge as Meatpackers Lift Prices; Hogs Rise

By Jacob Bunge Features Dow Jones Newswires

U.S. cattle futures prices jumped after meatpackers boosted bids to buy cattle late last week. Hogs gained.

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October-dated live cattle futures closed Monday at their highest level in four months after beef processors surprised analysts with much stronger-than-expected prices paid to secure animals across U.S. Plains state markets.

Those bids, following days of haggling between meat companies and cattle ranchers, reflected beef processors' need to keep meat supplies flowing in as consumer demand ramps up ahead of the U.S. holiday season, analysts said.

"No doubt, the packers were caught short," said Don Roose, president of U.S. Commodities. "The holiday buying started to show up, and apparently the packer was not well-covered for the orders."

December-dated live cattle futures, the most actively traded at the Chicago Mercantile Exchange, on Monday settled 2.1% higher at $1.234 a pound after hitting the market's limit for an upward move. October-dated contracts, which are set to expire soon, settled 3.6% higher.

Monday's surge propelled further a rally that has sent cattle futures prices 9.6% higher so far in October. Robust consumer demand and strong retail prices kept beef processor profit margins relatively healthy and pushed futures markets higher, even after U.S. Department of Agriculture data showed some beef exports declining.

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Cattle-buying meatpackers last week had been trying to hold bids for animals around $1.11 a pound, while ranchers angled for something closer to $1.16. As Friday wore on with little trade, some meat processors late in the day raised their bids, and additional cattle wound up sold early Saturday. Prices overall ranged between $1.13 and $1.195 a pound.

Though retailer and restaurant orders to book beef ahead of the U.S. Thanksgiving and Christmas holidays may have surprised beef processors last week, analysts said the rally in cattle could be short-lived.

When November arrives Wednesday, many meatpackers will be able to access cattle secured under contracts with producers, analysts said. By the middle of next month, a larger wave of cattle is expected to come to market, which will further add to available supplies.

Beef suppliers may also need to contend with rising supplies of pork, and lower prices for pork roasts and ham that could compete with beef cuts for shopper dollars.

Cash prices paid for hogs on Midwestern terminal farms softened Monday. That again raised questions among traders as to whether hog production has caught up with meat processors' demand after two new slaughterhouses opened in Iowa and Michigan in recent months.

December-dated lean hog futures settled 1.1% higher at 65.175 cents a pound.

Write to Jacob Bunge at jacob.bunge@wsj.com

CHICAGO--U.S. cattle futures prices jumped after meatpackers boosted bids to buy cattle late last week. Hogs gained.

October-dated live cattle futures closed Monday at their highest level in four months after beef processors surprised analysts with much stronger-than-expected prices paid to secure animals across U.S. Plains state markets.

Those bids, following days of haggling between meat companies and cattle ranchers, reflected beef processors' need to keep meat supplies flowing in as consumer demand ramps up ahead of the U.S. holiday season, analysts said.

"No doubt, the packers were caught short," said Don Roose, president of U.S. Commodities. "The holiday buying started to show up, and apparently the packer was not well-covered for the orders."

December-dated live cattle futures, the most actively traded at the Chicago Mercantile Exchange, on Monday settled 2.1% higher at $1.234 a pound after hitting the market's limit for an upward move. October-dated contracts, which are set to expire soon, settled 3.6% higher.

Monday's surge propelled further a rally that has sent cattle futures prices 9.6% higher so far in October. Robust consumer demand and strong retail prices kept beef processor profit margins relatively healthy and pushed futures markets higher, even after U.S. Department of Agriculture data showed some beef exports declining.

Cattle-buying meatpackers last week had been trying to hold bids for animals around $1.11 a pound, while ranchers angled for something closer to $1.16. As Friday wore on with little trade, some meat processors late in the day raised their bids, and additional cattle wound up sold early Saturday. Prices overall ranged between $1.13 and $1.195 a pound.

Though retailer and restaurant orders to book beef ahead of the U.S. Thanksgiving and Christmas holidays may have surprised beef processors last week, analysts said the rally in cattle could be short-lived.

When November arrives Wednesday, many meatpackers will be able to access cattle secured under contracts with producers, analysts said. By the middle of next month, a larger wave of cattle is expected to come to market, which will further add to available supplies.

Beef suppliers may also need to contend with rising supplies of pork, and lower prices for pork roasts and ham that could compete with beef cuts for shopper dollars.

Cash prices paid for hogs on Midwestern terminal farms softened Monday. That again raised questions among traders as to whether hog production has caught up with meat processors' demand after two new slaughterhouses opened in Iowa and Michigan in recent months.

December-dated lean hog futures settled 1.1% higher at 65.175 cents a pound.

Write to Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

October 30, 2017 15:22 ET (19:22 GMT)