The following article is from Reuters:
By Bob Burgdorfer
- Cattle up, stock market gains give traders confidence
- Higher beef and corn markets supportive
- August hogs set another record high
U.S. cattle futures posted their largest one-day gain in nearly two months on Thursday after the government cut its estimate of this year’s corn crop, a move investors bet will slow cattle production and raise prices.
Hog futures also rose as a smaller corn crop will drive up feed costs and discourage herd expansion at a time when pork exports are strong, traders said.
In a separate report, the U.S. Department of Agriculture raised its 2011 pork export estimate by 3 percent from July to 5.012 billion lbs and increased its forecast for 2012 pork exports by 2.7 percent to 5.135 billion.
The August cattle contract rose nearly 1.9 percent, its biggest one-day gain since mid-June, pulled up by a rallying U.S. stock market and higher beef prices.
After pit trading closed, cash cattle traded $3 higher at about $116 per cwt.
Cattle futures had been primed for a rally after holding up fairly well recently when the stock market was sharply lower.
“The cattle market acted good when there was bad news. When the stock market moved up it gave people confidence to buy,” said Jim Brooks, floor manager for R.J. O’Brien.
Cash beef prices rose on Thursday and are up more than 3 percent since Friday as supermarkets are buying meat to cover U.S. Labor Day promotions, traders said.
Beef exports eased last week but remain above year-earlier levels, with the USDA on Thursday reporting that week’s sales at 14,600 tonnes. That was down from 17,200 the week before but up from 8,900 a year ago.
The August cattle 2LCQ1 closed up 2.15 cents, or nearly 1.9 percent, at 116.450 cents per lb and October 2LCV1 gained 2.075 cents, or nearly 1.8 percent, to 119.525.
Feeder cattle were pulled higher by live cattle, despite big gains in the corn market. Higher feed corn prices often have producers paying less for feeder cattle.
Corn prices rose after the USDA on Thursday lowered its estimate for this year’s U.S. crop as hot weather hurt development.
August feeder cattle 2FCQ1 closed up 1.300 cents, or 0.98 percent, at 134.60 and September 2FCU1 up 1.200 cents, or 0.89 percent, at 136.30.
LESS CORN POWERS HOGS
Hog futures bolted higher in deferred months as less corn could discourage herd rebuilding, keeping hog and pork supplies tight and higher priced.
Worries about this year’s corn crop have had producers reluctant to expand herds. With pork exports forecast to continue higher, a lack of expansion could make it hard to serve domestic and export markets.
“Even if the economy slows down more, tight meat supplies will take retail meat and poultry prices to new all-time highs in both 2012 and 2013,” said Jim Robb, agricultural economist at Livestock Marketing Information Center. A
ugust hogs expire on Friday but continued to draw investor interest because of strong cash markets. Cash hogs traded about $1 per cwt higher in the closely watched Iowa/Minnesota market on Thursday.
CME August hogs 2LHQ1 closed up 0.925 cent, or 0.87 percent, at 107.20 cents per lb. That was the highest close ever for a lead contract. The actively traded October 2LHV1 rose 1.250 cents, or 1.44 percent, at 88.100 cents.
Posted by Haylie Shipp