CHICAGO, Oct 23 (Reuters) - U.S. live cattle futures scaled to their highest point in 5-1/2 months on Wednesday as tighter-than-expected beef stocks and rising cash beef prices triggered active fund buying that took prices through key technical resistance levels.
Actively traded contracts posted their strongest gains in nearly a month, breaking out of a narrow trading range that had constrained price movement over much of the past week.
Chicago Mercantile Exchange (CME) December live cattle settled 1.550 cents higher at 115.250 cents per pound after breaching chart resistance around the 115-cent level. February live cattle broke through technical resistance around 120 cents, closing 1.325 cents higher at 120.425 cents per pound.
After Tuesday’s close, the U.S. Department of Agriculture (USDA) said U.S. beef stocks in cold storage declined 1.2% in September from a month earlier and 8.5% from a year earlier. Many traders had expected a supply increase or a smaller decline.
Wholesale beef prices have also been rising, with choice cuts up $2.35 on Wednesday at $223.28 per cwt, up $5.52 from a week ago.
Feeder cattle futures followed live cattle higher, further supported by weak grain prices.
CME November feeder cattle futures were up 1.250 cents at 144.750 cents per pound, while the actively traded January contract was up 1.400 at 141.200 cents.
Lean hog futures were mostly lower, pressured by weakening pork prices and concerns that pork purchases by China have not lived up to market expectations.
“We’ve rallied the deferred contracts because of an anticipation in Chinese purchases. Those purchases probably will come but they have put on a very high premium,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.
Adequate stocks of pork in U.S. cold storage also weighed on the market, after the USDA reported total pork stocks at the end of September up 1.6% percent from a year earlier. Closely watched stocks of pork bellies at the end of September were up 34% from a year ago at the highest since 1971, USDA data showed.
December lean hog futures settled 0.325 cent at 65.825 cents per pound, while February futures fell 1.175 cents to 75.100 cents per pound.
Reporting by Karl Plume in Chicago Editing by Bill Berkrot