May 25, 2018 / 9:59 PM / 9 months ago

LIVESTOCK-Feeder cattle extend gains after USDA shows drop in placements

    By Michael Hirtzer
    CHICAGO, May 25 (Reuters) - U.S. cattle futures rose on
Friday, shrugging off earlier declines on technical buying and
support from government data showing fewer cattle placed in
feedlots during April, traders and analysts said.
    Relatively thinly traded feeder cattle futures        
jumped more than 1 percent after the U.S. Department of
Agriculture released its monthly Cattle on Feed report at
midday, and those gains pushed up more the actively traded live
cattle market        .
    "When I started seeing the rally late, I think it was led by
the feeder cattle. The deferred live cattle caught a little fire
with that," said one U.S. futures trader.    
    Chicago Mercantile Exchange August feeder cattle       
settled up 1.625 cents at 144.925 cents per pound, the highest
since May 7. The weekly percentage gain of more than 5 percent
was the largest in the contract's history.
    Most-active CME August live cattle        finished 0.525
cent higher at 102.300 cents per pound.
    While the USDA report underscored abundant U.S. cattle
supplies, declines in placements of cattle in feedyards declined
by about 8 percent in April. That suggested that feedlots might
need to buy cattle to fill up their pens.             
    And even as the total supply of cattle on feed was up about
5 percent, new supplies available to bring into feedyards was
beginning to tighten, the traders said.
    "We are going to have a hard time finding animals," said
Zaner Ag Hedge analyst Ted Seifried. "The supply is going to dry
up a little bit."
    The Cattle on Feed report was relatively in line with
pre-report analyst estimates. The data showing large supplies on
its own could be perceived as bearish but many had prepared for
    "A lot of times we get these slightly bearish reports that
come out as expected, and we rally from there," Seifried added.
    Cash cattle after the report fetched about $110 per cwt in
Kansas and Nebraska - sales that were down $5 to $6 from a week
ago, suggesting limited demand for the moment from beef packers.
    Lean hog futures         were little-changed in muted
trading ahead of the three-day U.S. Memorial Day holiday
    CME July hog futures        finished 0.775 cent higher at
77.550 cents per pound, keeping within the wider trading range
established on Thursday.

 (Reporting by Michael Hirtzer; Editing by Richard Chang)
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