Commodities

LIVESTOCK-CME feeder cattle futures jump as grain costs tumble

Chicago Mercantile Exchange feeder cattle futures climbed on Tuesday as a steep slide in grain prices made animal feed costs look cheaper, traders said.

By Tom Polansek

CHICAGO, July 6 (Reuters) - Chicago Mercantile Exchange feeder cattle futures climbed on Tuesday as a steep slide in grain prices made animal feed costs look cheaper, traders said.

Traders are keeping a close eye on the grain markets after supply fears drove prices to eight-year highs during the spring. Corn and soy futures surged last week when the U.S. Department of Agriculture (USDA) issued lower-than-expected plantings estimates but tumbled on Tuesday on improving U.S. crop weather. GRA/

High feed costs can squeeze profit margins for cattle and hog producers and sometimes prompt them to reduce herd sizes or raise animals to lighter weights. Livestock producers hope favorable U.S. crop weather leads to above-average U.S. corn and soybean yields to supply the sector with more feed.

With crop plantings lower than expected, that leaves "any relaxation in feed prices entirely dependent on the attainment of at least trend-type yields," said Joel Karlin, analyst for Western Milling.

CME August feeder cattle FCQ1 surged 3.575 cents to 160.625 cents per pound. September feeders advanced 3.3 cents to 162.725 cents per pound.

August live cattle futures LCQ1 rose 0.400 cent to 122.400 cents per pound.

Strong domestic and export demand for U.S. beef has helped underpin cattle futures, analysts said.

From January to May, total U.S. beef exports were up about 15% from a year earlier, according to the latest official data from the USDA.

"Even if domestic beef demand slides in the near future, exports appear more than able to make up for it," said Karl Setzer, commodity risk analyst for AgriVisor.

In the pork market, live hog futures for August delivery LHQ1 jumped 2.125 cents to 102.350 cents per pound. Deferred hog futures finished weaker.

(Reporting by Tom Polansek in Chicago Editing by Sonya Hepinstall)

((Thomas.Polansek@thomsonreuters.com; https://twitter.com/tpolansek))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

US Markets

Latest Commodities Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More