October 14, 2016 / 7:11 PM / 10 months ago

LIVESTOCK-Cattle gain on short-covering after six-year lows

By Michael Hirtzer
    CHICAGO, Oct 14 (Reuters) - Chicago Mercantile Exchange live
cattle futures rose more than 1 percent on Friday,
boosted by short-covering as traders took profits on bearish
bets after prices fell to six-year lows in the previous session.
    Feeder cattle also recouped a portion of their losses
but gains in feeders were capped by sharply higher corn prices,
which could raise costs for fattening cattle.
    "It's purely short-covering from a technical perspective,"
said Global Commodities Analytics analyst Mike Zuzolo.
    News that the CME Group Inc was considering
switching its live cattle contract to a cash settlement process
to reduce volatility was also encouraging to some traders,
Zuzolo said.
    CME's feeder cattle and lean hog futures markets already are
cash-settled, and the exchange was reviewing the live cattle
contract due to wild swings in prices in recent months, CME
Group officials told Reuters on Thursday. 
    Live cattle fell to the lowest levels since August of 2010
on Thursday, with those losses driven in part by a rising dollar
 that made U.S. commodities such as beef more expensive in
some international markets.
    "The (cattle) market had run down in lockstep with a
strengthening dollar," Zuzolo said.
    The dollar trimmed its gains against a basket of currencies
while cattle futures tested their lows, and the reversed sharply
higher.
    Most-active CME December live cattle jumped 1.275
cents to 97.450 cents per lb, notching its largest daily bounce
in 1-1/2 weeks.
    CME November feeder cattle climbed 0.825 cent to
115.650 cents per lb, supported by technical buying despite corn
futures hitting the highest levels since July. Feeder cattle and
corn futures typically move in opposite directions.
    Lean hog futures fell, reversing after several sessions of
gains. Hog futures were rebounding from last week's seven-year
lows, but supplies of hogs and pork remained abundant.
    CME December lean hog futures finished 1.950 cents
lower at 42.225 cents per lb, still holding above last week's
lifetime low of 41.100.
    "We have too much product out there," John Ginzel, analyst
at brokerage the Linn Group, said of U.S. pork supplies.
    

 (Reporting by Michael Hirtzer in Chicago; Editing by Tom Brown)

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