CHICAGO, Oct 16 (Reuters) - U.S. live cattle futures closed modestly higher on Wednesday, extending a five-week rally tied to expectations of strong prices this week for cattle in the cash market, traders said.
“Cash is $1 to $2 higher every week, better than what people anticipated,” said Scott Varilek, a broker at Kooima and Kaemingk Commodities Inc.
Chicago Mercantile Exchange December live cattle settled up 0.425 cent at 113.875 cents per pound after reaching 114.200 cents, the contract’s highest since July 29.
CME feeder cattle futures closed narrowly mixed, with the November contract down 0.150 cent at 145.925 cents per pound and the January up 0.200 cent at 142.375 cents.
Cash cattle traded in Iowa this week at about $111 per cwt, at the high end of last week’s trade, but cash trade in the big Texas and Kansas markets had yet to develop, traders said.
Despite a month-long rally in CME live cattle, traders cautioned that open interest in live cattle futures has been declining - a sign of traders exiting short positions, rather than establishing bullish new long positions.
CME lean hog futures closed lower on Wednesday, backing down from Tuesday’s strong surge, on technical selling and uncertainty about pork demand from China, traders said.
U.S. President Donald Trump said on Friday that China had agreed to purchase $40 billion to $50 billion worth of U.S. agricultural goods in a first phase of an agreement to end a 15-month trade war.
However, China would make the purchases only if Trump rolls back levies put in place since the trade war began, Bloomberg reported on Tuesday, citing people familiar with the matter.
Trump said on Wednesday that he likely would not sign any trade deal with China until he meets with Chinese President Xi Jinping at a forum in Chile being held Nov. 11-17.
CME December lean hog futures settled down 1.500 cents at 70.625 cents per pound, while February hogs ended down 0.300 cent at 78.850 cents. (Reporting by Julie Ingwersen, Editing by Sherry Jacob-Phillips)