LIVESTOCK-Live cattle futures rebound as trade adjusts to supply pressure shock
By Christopher Walljasper
CHICAGO, Oct 27 (Reuters) - U.S. live cattle futures rebounded on Tuesday, as packers kept processing at a higher-than-usual pace, despite a bearish cattle-on-feed report, traders said.
Meanwhile, hog futures eased slightly on Tuesday, as falling cutout prices have carved into packer margins, traders said.
CME December live cattle futures gained 0.650 cent to 104.050 cents per pound, while January feeder cattle added 1.65 cents to 128.425 cents per pound.
Daily slaughter fell 3.3% from last week, but is still 3.5% ahead of the same week last year.
Packer margins continued to tighten from early COVID-19 pandemic-induced highs, but remained strong at $189.53 per head.
"It’s still a decent margin for packers," said Matt Wiegand, a risk management consultant with FuturesOne.
Wiegand said that, after cattle futures dropped sharply on Monday, the trade will likely see contracts steadily climb for the rest of the week as packers move animals through their plants at such a steady clip.
"I wouldn’t expect a wild rally, but if we can build on the early week action, I think we see a short term drift higher," Wiegand said.
The U.S. Department of Agriculture's monthly Cattle on Feed report Friday showed a 3.8% gain in feedlots inventories on October 1, the highest since records began in 1996.
December lean hogs futures settled down 0.100 cent to 67.650 cents per pound.
Though hog futures slipped on Tuesday, traders noted that the cash market for hogs remains strong, supporting the futures markets as they come off the highs seen in recent weeks. (Reporting by Christopher Walljasper in Chicago; Editing by David Gregorio)
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