November 23, 2018 / 7:26 PM / 23 days ago

LIVESTOCK-Cattle, hog futures gain in thin trading on demand optimism

    By Michael Hirtzer
    CHICAGO, Nov 23 (Reuters) - U.S. livestock futures were
higher on Friday, with lean hogs         rising sharply and
cattle         notching relatively smaller gains as each market
was buoyed by hopes of better meat demand, traders said.
    Hog futures on the Chicago Mercantile Exchange continued to
rise on expectations that the spreading African swine fever
virus in top hog producer China will force buyers to boost
imports.
    China officials on Friday said they were working to keep hog
and pork supplies stable as farmers culled herds due to the
highly virulent disease.             
    Even with China tariffs on imports of U.S. pork, increased
shipments of the meat from Europe or South America could have
ripple effects that would prompt demand for American supplies.
    U.S. Department of Agriculture data on Wednesday showed
smaller year-on-year domestic pork supplies in cold storage,
partially driven by increased exports.             
    "You have the underlying support from the African swine
fever that just keeps getting worse," said U.S. independent
futures trader Dan Norcini.
    "Cold storage was friendly to the market, if not outright
bullish. We have record (hog) slaughter numbers but the demand
for pork is pulling supplies down," he added.
    CME February lean hog futures         settled up 1.650 cents
at 67.825 cents per pound.
    The contract surged to a lifetime high on Tuesday before
easing on Wednesday and then clawing back a portion of those
declines on Friday.
    CME February live cattle futures         were up 0.175 cent
to 120.925 cents per pound, a three-week high. January feeder
cattle         were up 0.750 cent to 149.375 cents.
    Beef packers after the close of trading on Wednesday began
bidding more aggressively to buy cattle in cash markets,
ultimately paying about $116 to $117 per cwt, in sales that were
higher than the previous week's deals of mostly $113.
    Wholesale beef prices have been relatively strong,
bolstering profit margins for meat packers.           
    "Beef has been hanging in there. Maybe we have some demand
kicking in. People will be sick of turkey, obviously," Norcini
said.
    Trading volume was thin in an abbreviated session following
Thursday's U.S. Thanksgiving Day holiday when many Americans
dine on turkey.
    Stock indexes        and crude oil               were lower.
Such "outside markets" often weigh on cattle as consumers often
spend less on pricier dining options when financial markets
falter.
    "The good cash trade opened us up a little bit," Top Third
Ag Marketing analyst Craig VanDyke said of cattle. "That's nice
to see with outside markets being as heavy as they are."

 (Reporting by Michael Hirtzer
Editing by James Dalgleish)
  
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