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CME update: short covering and bargain buying lift cattle futures

10 December 2020

US live cattle futures firmed on 9 December, bouncing back after four straight sessions of losses that dragged prices to 2 ½ week lows.

Reuters reports that bargain-buying and short covering have boosted cattle futures, but traders remain cautious as they monitor broadening COVID-19 restrictions and pandemic relief negotiations in Washington.

Gains in both markets were tempered by sinking meat and cash livestock prices, and by concerns about domestic demand as rising US coronavirus infections have forced closures of dine-in restaurants and food service outlets.

"We've got restaurants closing down for dining in ... People don't usually get takeout ribeyes or New York strips," said Karl Setzer, commodity risk analyst with AgriVisor, referring to high-end beef cuts that rely on restaurant traffic.

"Cash cattle have been under pressure and that's been putting the hammer down on futures. We have good export though, and our export market is making up for the loss that we would probably be seeing in futures from the domestic market," he said.

Beef export sales through late November are 5.5 percent ahead of the same time a year ago, while pork export sales are up 18.1 percent, according to the US Department of Agriculture (USDA).

The agency is due to release updated weekly export sales figures early on Thursday 10 December.

Actively traded Chicago Mercantile Exchange February live cattle futures ended 0.200 cent higher at 110.975 cents per pound. January feeder cattle fell 0.550 cent to 137.025 cents per pound, while deferred contracts firmed.

The choice boxed beef cut-out tumbled $6.76 to $218.26 per cwt on Wednesday, bringing month-to-date losses to more than $25, according to the USDA.

Read more about this story here.

Source: Reuters



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