Chicago | Reuters — Supply concerns and follow-through buying pushed Chicago Mercantile Exchange feeder cattle futures to their highest level since July on Friday after Washington said it may continue blocking imports of Mexican cattle until next year.
Live cattle futures also ended stronger, while lean hog futures weakened.
Feeder cattle have rallied more than six per cent over the last two weeks, with the U.S. Department of Agriculture accelerating gains this week by halting imports from Mexico over a case of New World screwworm (NWS) in a cow there.
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Imports could resume in about three weeks, though it is more likely to happen after Christmas and “in the January timeframe,” USDA said in a radio report released late on Wednesday.
The U.S. imports more than a million Mexican cattle annually to process in U.S. beef plants. The U.S. beef sector has increasingly relied on imports as the nation’s cattle herd has dropped to its smallest size in decades.
USDA wants to prevent New World screwworm from entering the country through cattle imports after eradicating the pest from the U.S. in 1966. Screwworm maggots can burrow into livestock flesh and are often fatal for animals.
Mexico’s screwworm detection adds to supply concerns as President-elect Donald Trump, who takes office in January, has said he plans to impose a 25 per cent tariff on all products from Mexico and Canada.
“You add that to the uncertain stuff with trade, and there’s always the fear it turns into something a little bit bigger,” said Matt Wiegand, commodity broker for FuturesOne.
CME January feeder cattle futures rose 0.700 cent to end at 259.475 cents per pound, after markets closed on Friday. February live cattle edged up 0.025 cent to 188.625 cents per pound
“Trade is thin with the holiday, and the path of least resistance has been up,” Wiegand said.
In CME’s lean hog market, February futures fell 1.6 cents to 86.325 cents per pound after hitting a contract high on Wednesday.
