Cattle futures rose to the highest close since early August on strong demand for beef and technical support.
Meatpackers late last week paid higher prices for slaughter-ready cattle, sparking a rally in the futures market this week. That helped live cattle contracts find technical momentum and leapfrog their most recent highs.
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"We've been hearing this for weeks in the sale barn, that demand has been extremely strong," said Jason Britt, president of Central States Commodities in Kansas City, Mo. "It seems like the futures market has been following what we've been hearing on the cash market for some time."
October live cattle futures rose 2% to $1.137 a pound at the Chicago Mercantile Exchange, the highest close since Aug. 4.
Meatpacker margins have hovered above $130 a head since early September. That has allowed packers to start raising their bids on the cash market, prompting bets that cattle prices have rebounded from seasonal lows.
Demand for beef is also strong. Wholesale prices were higher so far this week and exports rose in August, the most recent month for which data are available.
But analysts say growing cattle and beef supplies could weigh on prices. A government report in late September showed a larger-than-expected increase in cattle being fattened for slaughter, suggesting that slaughter-ready herds will grow early next year. Meatpackers are also taking advantage of wide margins to slaughter more cattle than a year earlier.
Hog futures were higher too. Wholesale pork and cash swine prices are rising after appearing to bounce off a seasonal low in late September, analysts said. But analysts said supply pressure, as meatpackers slaughter a record number of hogs, could derail that recovery if demand doesn't keep up.
CME October lean hog futures rose 2% to 60.175 cents a pound.
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(END) Dow Jones Newswires
October 10, 2017 15:46 ET (19:46 GMT)