May 18, 2017 / 7:37 PM / 8 months ago

LIVESTOCK-Cattle rebound on technical buying, lower animal weights

    By Michael Hirtzer
    CHICAGO, May 18 (Reuters) - U.S. cattle futures climbed on
Thursday, rising on technical buying and lower animal weights
that suggested feedlots were aggressively marketing cattle to
meet strong beef packer demand, traders and analysts said.    
    Both Chicago Mercantile Exchange live         and feeder
        cattle futures were technically oversold after steep
losses during the past two weeks. Investment funds were
unwinding a record-large bullish bet in cattle amid expectations
wholesale beef prices would decline.
    However, U.S. Department of Agriculture data released at
midday showed lower average U.S. cattle carcass weights,
prompting futures to reverse from earlier losses. Cattle weights
fell to 786 pounds in the week ended May 6, down from 798 pounds
last week and 813 pounds a year ago.
    "The biggest news is the drop in weights - the massive
drop," said Top Third Ag Marketing broker Craig VanDyke.
    Most-active CME August live cattle        rose to its
session highs in the wake of the midday USDA data, before
settling up 0.825 cent to 119.750 cents per pound. June live
cattle        finished 0.475 cent higher at 122.925 cents.
    CME August feeder cattle        gained 1.625 cents to
149.350 cents per pound, further supported by declines in
Chicago Board of Trade corn futures       . Feedlot profit
margins for fattening cattle generally rise when animal feed
prices fall.
    The gains in futures came despite lower prices for cash
cattle and flat prices for choice-grade wholesale beef. Feedlot
cattle on Thursday fetched $133 to $134 in Kansas and Texas,
down from sales of $137 to $138 last week.                    
    Lean hogs futures         also notched small gains after
earlier trading lower on profit-taking in the wake of
Wednesday's three-month highs.
    "(Hogs) were up near contract highs yesterday. I don't think
it's a major surprise to see some selling here," VanDyke said.
    But hogs edged up at midday, following steeper gains in
cattle. Hog prices also generally rise seasonally as U.S.
temperatures begin to rise, slowing the rate of weight gain in
animals, and as more U.S. consumers cook meat on outdoor grills.
    CME June hogs        finished up 0.250 cent to 79.150 cents
per pound. July hogs        climbed 0.275 cent to 79.275 cents.

 (Reporting by Michael Hirtzer in Chicago; Editing by Andrew
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