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LIVESTOCK-Cattle Charges to Seven-Week High


U.S. cattle futures bounded to a seven-week high early on Monday after a government report on Friday showed a smaller-than-expected feedlot cattle supply.

Volume-leader August cattle has increased nearly 7 percent since last Wednesday, which has some analysts concerned about its ability to advance much more as beef sales should slow after the U.S. Independence Day holiday on July 4.

Hogs advanced, pushed higher by a near $3 jump in the closely watched Iowa/Minnesota cash market on Friday, as investors are betting a seasonal drop in hog numbers will keep cash going up.

In cattle, Monday's gains were in line with the forecasts that followed Friday's report. The report showed 4 percent more cattle feedlots on June 1 than a year ago, while analysts, on average, expected 5.4 percent more. Also, that June 1 supply was down 2.5 percent from a month earlier.

"The news is fine, but this rally is huge," said Bob Short, analyst at PFG Best, who worries the futures market may be running out of steam.

If futures finish higher on Monday and August can move through chart resistance near 112.70 cents, then 115 to 116 cents is possible, said Short

Friday's report was the first hard evidence that cattle supplies are coming down. For months analysts had expected a decline but numbers stayed high as cattle from Mexico and from the drought-damaged pastures in the southwest kept flowing into feedlots.

"I think our bias for the next two weeks should still be up, but we've had the big gains," Rich Nelson, analyst with Allendale Inc, said of the cattle.

After those two weeks beef demand should slow, which it typical does during the hottest period of summer.

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