Lean hog futures close mixed - CME

Cattle futures climb ahead of USDA cattle-on-feed report
calendar icon 19 May 2023
clock icon 2 minute read

Chicago Mercantile Exchange (CME) live cattle futures rose on Thursday on technical buying and position-squaring ahead of a monthly US Department of Agriculture (USDA) report that is expected to show fewer cattle in U.S. feedlots compared to a year ago, Reuters reported, citing traders.

CME June live cattle settled up 0.700 cent at 165.525 cents per pound, and benchmark August futures ended up 0.500 cent at 163.625 cents.

CME August feeder cattle jumped 3.350 cents to finish at 234.500 cents per pound after setting a life-of-contract high at 234.550 cents. Feeder cattle futures rose as corn futures fell to a 19-month low, signalling cheaper feed costs. 

Ahead of Friday's monthly USDA Cattle on Feed report, analysts surveyed by Reuters on average expected the government to report the number of cattle in US feedlots as of May 1 at 96.5% of a year ago, or about 11.6 million head. Analysts on average estimated feedlot placements in April at 96.3% of a year ago and April cattle marketings at 90.3% of a year ago.

"Overall, the supply side looks very positive. The USDA last Friday estimated that US beef production was going to fall (in 2024), after falling this year. So there doesn't seem to be supply-side relief any time soon," said Doug Houghton, analyst for Brock Associates

The US beef cow herd dropped to its lowest level since 1962, the USDA said in January, after a severe drought raised costs for livestock feed.

Boxed beef prices inched higher on Thursday, with choice cuts priced at $298.31 per hundredweight (cwt), up 16 cents from Wednesday, and select cuts up 72 cents at $283.61 per cwt.

CME lean hog futures closed mixed, with nearby contracts higher and back months lower. June hogs settled up 0.425 cent at 85.300 cents per pound and the July contract rose 0.050 cent to end at 85.600 cents.

On the pork side, the USDA priced the carcass cutout late Thursday at $83.73 per cwt, up 66 cents from Wednesday.

The USDA reported export sales of US pork in the week to May 11 at 31,900 tonnes, up 6% from the previous week but down 25% from the prior four-week average. Weekly beef sales at 17,400 tonnes were up 5% from the previous week and up 7% from the prior four-week average.

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