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Commodity futures

Livestock Markets Rally Amid Expectations of Rising Cash Live Cattle Prices

Strategic Insights

— 1 min read

Livestock markets have seen significant price increases in recent days, with Chicago Mercantile Exchange lean hog futures closing sharply higher on Monday due to short covering, fund buying, and spreading. Pork belly futures have settled mixed, with August losing its 200-point daily price limit. This rally is attributed to expectations of another increase in cash live cattle prices this week as wholesale beef values recover. Industry sources speculate that higher prices paid for fed cattle in Texas/western Oklahoma and Kansas may be the catalyst needed to turn boxed-beef prices around from their recent downtrend.

Key Takeaways:

  • Chicago Mercantile Exchange lean hog futures closed sharply higher on Monday, with October finishing up its 200-point daily price limit amid short covering, fund buying, and spreading.
  • Pork belly futures settled mixed, with August losing its 200-point daily price limit, amid spreading and ideas that fresh belly prices may be near a psychological peak.
  • Industry sources speculate that higher prices paid for fed cattle in Texas/western Oklahoma and Kansas may be the catalyst needed to turn boxed-beef prices around from their recent downtrend.
  • July trading volume on the Chicago Mercantile Exchange Inc. totaled 73,875,192 contracts, a record volume for the month, and 29.4% more than 67,690,841 reported a year ago.
  • Tyson Foods Inc. issued a cautious outlook and lowered full-year guidance due to rising grain prices and market challenges in two of its three meat categories.
  • The American Meat Institute urged the USDA to lift its ban on older cattle and Canadian pork exports to Australia resumed after a court ruling was appealed.

Statistics:

  • 73,875,192 contracts traded on the Chicago Mercantile Exchange Inc. in July, a record volume for the month.
  • 67,690,841 contracts reported in July a year ago, which was the previous July record.
  • 29.4% increase in trading volume on the Chicago Mercantile Exchange Inc. in July compared to the previous year.
  • 21.1% decrease in trading volume on the Chicago Mercantile Exchange Inc. in July compared to June.
  • 200-point daily price limit for October lean hog futures.
  • 200-point daily price limit for August pork belly futures.

Sources:

  • Dow Jones Commodities News via Comtex
  • Nikkei
  • The Nihon Keizai Shimbun
  • Kyodo News Service
  • AP
  • Dow Jones
  • University of Wyoming
  • Casper, Wyo., Star-Tribune
  • Dow Jones Newswires
  • Comtex SmarTrend(SM) Alert

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