November 13, 2018 / 11:31 PM / a month ago

LIVESTOCK-Feeder cattle rally from five-month low in technical bounce

CHICAGO, Nov 13 (Reuters) - Chicago Mercantile Exchange feeder cattle futures rallied from five-month lows on Tuesday in a short-covering and technical-buying bounce, traders said.

Live cattle futures followed feeders higher, although gains were clipped by limited packer demand for U.S. Plains feedlot cattle ahead of next week’s shortened Thanksgiving holiday week slaughter.

Actively traded January feeder cattle touched a five-month low before rallying more than 2 percent and closing near its session high. The contract ended up 3.250 cents at 146.975 cents per pound.

“We had a major technical reversal in the feeder cattle,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.

“The technical bounce spilled into the live cattle.”

The feeder cattle market rallied as technical traders bought back their short positions after the January contract hit a low of 142.675 cents. That price was a pivot point marking a 62-percent pullback of the contract’s rise from a life-of-contract low this spring to a contract high last month, and a bullish technical signal.

CME December live cattle settled up 0.450 cent at 115.375 cents per pound. Deferred contracts were as much as 0.825 cent higher.

Traders said gains in cash cattle prices will likely be limited as packers do not need many cattle in the near term. Packing plants are expected to be closed for at least a day next week for the Thanksgiving Day holiday on Thursday.

Lean hog futures remained largely firm as worries about an expanding outbreak of African Swine Fever in China underpinned the market.

Lean hogs also drew support from the December contract’s discount to the CME lean hog index, which most recently stood at 61.87 cents.

CME December hogs gained 0.750 cent to settle at 57.300 cents per pound, while the more active February hog contract was up 0.650 cent at 62.175 cents. (Reporting by Karl Plume)

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