LIVESTOCK-Live cattle futures end higher but post 9% decline for year

By Julie Ingwersen

CHICAGO, Dec 31 (Reuters) - U.S. live cattle and lean hog futures closed higher on Thursday, buoyed by fund-driven buying, strong weekly export sales data and optimism about consumer demand for meat in the coming months, traders said.

U.S. markets will be closed on Friday for New Year's Day.

Live cattle futures got a boost from firmer cash markets, with fat cattle trading in Thursday in the southern Plains at $112 per cwt, up $2 from last week.

Chicago Mercantile Exchange (CME) February live cattle futures settled up 0.575 cent at 115.025 cents per pound, and March feeder cattle rose 0.475 cent to end at 140.225 cents per pound.

CME February lean hogs climbed 2.675 cents to settle at 70.275 cents per pound.

The U.S. meat industry was challenged in 2020 as the COVID-19 pandemic sickened workers and forced numerous U.S. slaughterhouses to shut down in the spring, creating backlogs of cattle and hogs. For the year, front-month live cattle futures declined about 9% and lean hogs fell about 2%, while grains and metals advanced.

The relative weakness in livestock futures may be attracting speculators.

"There is a lot of money that has been on the sidelines, that is taking a look at commodities as an asset class ... These guys look are looking for bargains, and they are finding them in the livestock markets," said Dan Norcini, an independent trader.

"I think you are seeing hedge funds and index funds start to position for what they expect to be higher livestock prices next year," Norcini said.

Strong export data lent support. The U.S. Department of Agriculture reported export sales of U.S. pork in the week ended Dec. 24 at 54,000 tonnes (old and new marketing years combined), with China booking 24,300 tonnes.

Weekly beef export sales totaled 29,300 tonnes (old and new marketing years combined).

"U.S. pork is still cheap. The dollar is weakening. So there is no reason not to expect pork and beef demand to be strong next year," Norcini said.

The U.S. pork carcass cutout value rose $5.93 on Thursday afternoon to $78.58 per cwt, according to the USDA, while boxed-beef prices declined. (Reporting by Julie Ingwersen)

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