October 31, 2017 / 9:41 PM / a year ago

LIVESTOCK-Live cattle, hog futures hit contact highs on fund buying

    By Michael Hirtzer
    CHICAGO, Oct 31 (Reuters) - Chicago Mercantile Exchange live
cattle         and lean hog futures         rose to
life-of-contract highs on Tuesday, lifted by investment fund
buying linked to optimism that meat prices will continue to
rise, traders said.
    Speculative investors who already were holding massive net
long positions in cattle and hog futures added to those bets,
with hogs        jumping 4 percent and cattle        rising to
the highest levels since June.
    "Funds looked at this thing and decided this was an
opportunity to jump into the pool," CHS Hedging analyst Steve
Wagner said.
    Most-active CME December live cattle        was sharply
higher for the second straight session, settling up 2.225 cents
to 125.625 cents per pound, off the contract's earlier lifetime
peak of 125.900 cents. The October cattle contract       
expired at midday up 0.925 cent at 120.500 cents.
    The U.S. Department of Agriculture's choice boxed beef
cutout, which tracks beef deals in the wholesale market, was up
$3.12 to $206.44 per cwt.           
    Beef packers on Friday paid sharply higher prices to buy
cattle from feedlots in the U.S. Plains to take advantage of the
higher meat prices that boosted their profit margins - and those
gains in the cash market last week carried over into the futures
market this week.
    Weekly data on Friday from the Commodity Futures Trading
Commission showed large speculators, a category that includes
hedge funds, expanding their net longs in livestock contracts.
    CME January feeder cattle futures        on Monday finished
up 2.225 cents at 159.575 cents per pound after reaching a
contract high of 160.300 cents.
    Feeders also were supported by weakening corn futures
      , which reduced feed costs and can increase demand for
cattle from feedlots that fatten the animals to slaughter
    CME December hog futures        finished up 2.825 cents to
68.000 cents per pound, and hog futures on a continuous chart
       notched their biggest percentage gains since Oct. 3.
    Supplies of U.S. cattle, hogs and poultry were abundant and
the recent run-up in cattle and hog futures was largely tied to
demand, Wagner said.
    "Cash hogs have had an impressive run," he added. "All
things being equal, futures feel like they have to catch up."
    USDA data released after the close showed cash hogs in the
top market of Iowa and southern Minnesota were down 44 cents to
$64.21 per cwt while wholesale pork eased 3 cents to $78.54 per

 (Reporting by Michael Hirtzer; Editing by Dan Grebler)
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