Commodities : Livestock, Meat Futures Up

Livestock and meat futures rallied strongly Friday on the mistaken notion that the market needed a little upward adjustment before the Agriculture Department issued its cattle-on-feed report.

Traders had believed the report would show about a 25% increase in feedlot placements during July over last year’s extremely low figure.

Friday’s rally on the Chicago Mercantile Exchange came on the belief that the market may have slumped too low in recent days in anticipation of the report, said Chuck Levitt, an analyst in Chicago with Shearson Lehman Bros. But instead of a 25% increase in placements, the report showed that farmers and ranchers had put 43% more animals on feedlots for an eight-year high in the July figure.

“Prices should go sharply lower on Monday,” Levitt said.

The 1.54 million animals put on feed during July was 21% above the 10-year average for the month, he said.

On July 1 the number of cattle on feedlots was 8% below that of a year earlier, but the rush to get beef to market was great enough to reduce this to a 1% deficit by Aug. 1.

“Optimism returned to the cattle industry in one big month,” Levitt said.