Cattle futures ended the week with a bounce on higher-than-expected physical cattle prices.
December-dated live cattle contracts rose 2.3% to $1.189 a pound at the Chicago Mercantile Exchange, the highest close this month. Contracts for feeder cattle, which need to be fattened before slaughter, also rose.
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The late surge came as meatpackers unexpectedly paid more for physical cattle on the cash market than a week earlier. The U.S. Department of Agriculture said that cattle traded for $118 per 100 pounds on a live basis in Kansas and $188 on a dressed basis in Nebraska, though the volume of sales was low. Market observers said cattle also traded in Iowa at those levels.
Cash prices last week averaged $117.50 live and $187 dressed nationally, and analysts had expected prices to fall further this week as packers eased off buying. But packers may have needed more livestock than expected, they said, helping to halt further losses.
Troy Vetterkind, owner of Vetterkind Cattle Brokerage, said earlier Friday that higher futures prices were unlikely to hold during the holiday period. Beef demand has recently been underwhelming, with wholesale prices falling every day this week before turning higher at midday Friday.
"I still believe we have further downside risk in the market," he said.
Hog futures also rose. CME December lean hog contracts rose 1.3% to 68.525 cents a pound, with the late rally in the cattle market helping to carry prices higher.
Wholesale pork prices rose 21 cents to $77.52 per 100 pounds as of midday Friday, adding to modest gains from Thursday. Cash hog prices have fallen every day this week, however.
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(END) Dow Jones Newswires
December 15, 2017 15:36 ET (20:36 GMT)