September 19, 2017 / 9:31 PM / a year ago

LIVESTOCK-Feeder cattle hit 2-mth high, hogs firm on technical buying

    By Michael Hirtzer
    CHICAGO, Sept 19 (Reuters) - U.S. livestock futures gained
on technical buying on Tuesday, with feeder cattle        
rising to a two-month high and lean hogs         climbing by as
much as 2.6 percent, traders said.
    Fresh news remained scant, but traders were more optimistic
about higher cash prices for both cattle and hogs. Declining
prices for corn        cut feed costs for livestock producers,
bolstering profit margins and boosting demand for feeder cattle.
    "I think the (cattle) market is trying to bottom," said
independent livestock trader Tommy Beall. "Corn is cheap enough
... and that's supportive."
    Chicago Mercantile Exchange October feeder cattle       
firmed by 0.850 cent to settle at 152.800 cents per pound, the
highest since July 20. More actively traded CME October live
cattle        were up 0.400 cent at 107.975 cents.
    Live cattle futures continued to rise from multimonth lows
notched on Aug. 31 amid ideas that beef packers who were earning
big profit margins would pass on some of those gains to the
feedlots that sell them cattle.
    Average beef packer profit margins were estimated at $148.45
per head of cattle, according to HedgersEdge LLC. That is down
from $151.30 per head a week ago but up from $67.30 per head a
month ago.        
    Analysts polled by Reuters expected the U.S. Department of
Agriculture in a monthly report on Friday to show the number of
cattle placed in feedlots last month down 2.9 percent from the
same month in 2016.             
    The USDA estimated the U.S. daily hog slaughter at 455,000
hogs, matching the record-large kill from Thursday.           
    Two new pork packing plants in Iowa and Michigan were
increasing their slaughter rates after beginning production
earlier this month, traders said.
    The slaughterhouses were needed to prevent an oversupply of
U.S. hogs, with hog producers earlier this year increasing
production in anticipation of a broader demand base.
    CME lean hog futures were higher, lifted in part by
bear-spreading as the December hog futures contract       
surged 1.675 cents to 59.725 cents per pound while front-month
October futures gained only 0.125 cent to 60.125 cents.
    Tim Hughes, leader of the hog margin team at Commodity and
Ingredient Hedging, said some traders were buying December
futures on bets that the new packing plants would be more
aggressive hog buyers later this year.
    "There's more optimism that at some point in the near future
you might have more competition for these hogs as the plants get
ramped up," Hughes said.

 (Reporting by Michael Hirtzer; Editing by Jonathan Oatis)
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