LIVESTOCK-U.S. feeder cattle futures plunge as corn prices surge

Mon Aug 26, 2013 4:00pm EDT
 
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* CME live cattle futures rise following USDA report
    * Short-covering, fund buying lift CME hog futures

    By Theopolis Waters
    CHICAGO, Aug 26 (Reuters) - Chicago Mercantile Exchange
feeder cattle futures closed  sharply lower on Monday, with
October down its limit of 3 cents per lb, as investors worried
that high-priced corn may curb feedlot demand for young cattle,
traders said.
    Corn prices at the Chicago Board of Traded spiked near their
40-cent daily price limit led by hot weather in the U.S. Plains
that could hurt crops.
    Nearby CME feeder cattle contracts fell below moving average
support levels, and then funds started to liquidate.
    Spot August feeder cattle closed at 154.400 cents,
down 0.600 cent per lb and beneath the 10-day moving average of
154.72 cents.
     Most-actively traded September closed 2.525 cents
lower at 154.125 cents. It settled below the 40-day moving
average of 155.90 cents.
     October feeder cattle ended 3.000 cents lower at
155.850 cents.
    
     LIVE CATTLE GAIN ON REPORT  
     CME live cattle closed higher after Friday's bullish U.S.
Department of Agriculture cattle-on-feed report, said traders
and analysts.
    The number of cattle placed in U.S. feedlots in July fell to
a five-year low for the month as the smaller cattle herd and 
expensive feed resulted in fewer cattle for feedyards to draw
from. 
    "The gains in cattle futures today were all about the
surprisingly low placement number in Friday's report," a trader
said.
    Speculators bought deferred live cattle contracts with the
view that costly-corn would cause ranchers to feed fewer animals
and nourish them to lighter weights.
    CME live cattle rose despite tepid wholesale beef demand and
steady, rather than higher, cash cattle returns late on Friday.
    Last Friday, cash cattle in Texas and Kansas moved at mostly
$123 per hundredweight (cwt), and $125 in Nebraska.
    Packers are buying cattle for next week that will be
shortened by one day because of the U.S. Sept. 2 Labor Day
holiday.
    And grocers are close to filling their beef needs for Labor
Day grilling promotions.
    Monday morning, the government quoted the wholesale choice
beef price, or cutout, at $195.69 per cwt, down 50 cents from
Friday. Select cuts fell 87 cents to $183.22.
    Investors are monitoring a heat wave in the central Midwest
that might discourage weekend holiday cookouts.
    Spot August live cattle ended up 0.300 cent to 
123.400 cents per lb. Most-actively traded October 
closed 0.450 cent higher at 127.150 cents.

    HOGS RALLY AS SHORTS COVER     
    Mixed rather than lower cash hog prices stirred
short-covering and encouraged CME hog futures buying, traders
said.
    Some packers raised cash hog bids to fill the rest of this
week's production schedule. The seasonal increase in supplies
afforded other packers inventories into the middle of next week.
    The government on Monday morning quoted the average hog
price in the western Midwest market up 91 cents per cwt from
Friday to $91.22, and down $1.27 to $90.44 in the eastern
region.
    Government data on Monday morning showed the wholesale pork
price, or cutout, at $97.79 per cwt, 80 cents lower than Friday.
    October hogs finished 0.925 cent higher at 86.025
cents per lb while December ended up 0.825 cent at 
83.075 cents.