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CME: Pressure From Corn and Hogs Lifts Cattle Futures, Tuesday

24 July 2013

US - Live cattle futures enjoyed gains for most of the day, but buying interest dried up ahead of the close seeing August live cattle drop 2 cents to $121.90.

Futures ended low-range and mixed for the day, with 2013 contracts 2 1/2 to 30 cents higher and deferreds steady to 30 cents lower, say markets experts at ProFarmer.

Pressure on the corn market and gains in lean hogs lifted the live cattle market in early trade. In addition, traders are looking ahead to seasonal supply tightening that they expect to help the cash and product markets to put in a low.

October cattle traded managed to close 30 higher on the session after trading as much as 110 points higher near the pit opening, write CME commentators.

August cattle closed just 1 tick higher at 121.90, a full 100 points off of the early highs. Continued talk that the cash market has bottomed helped to support the market early, however, the premium of futures to the cash helped to spark selling in the August contract.

The upside appears limited by weakness in the beef market and the stiff premium of futures to the cash. With ideas that supply is tightening, traders think cash cattle can trade at least steady this week. Some traders, however, question this idea as beef prices are down and fill-in retail business this week is very slow after sluggish consumer demand for all of last week.

End of June cold storage supply showed a record high level for the month.

Some traders see the placements in June as a neutral indicator but the weight breakdown showed a jump in heavier-weight feeder placements and a sharp drop in lighter-weight feeder placements for the month as a reason to suspect that short-term production could remain high into August and September and numbers will tighten later in the year.

Boxed-beef cut-out values at mid-session came in at $187.83, down $1.15 on the day and down from $190.47 last week at this time.

Slaughter came in right on trade expectations at 123,000 head.


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