U.S. live cattle settled in positive territory for a fourth consecutive session as the recent rise in wholesale beef prices stirred anticipation for higher cash cattle values.
Positioning before the U.S. Department of Agriculture’s monthly cattle-on-feed report on Friday offered extra support to Chicago Mercantile Exchange (CME) live cattle.
Analysts expect Friday’s government data to show that the number of cattle placed in feedlots likely fell last month after the worst drought in more than half a century pushed feed costs to all-time highs.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Traders are expecting sellers would receive more money for their cattle after packers cut slaughter rates that pushed up beef prices which improved their margins, said CattleHedging.com analyst Elaine Johnson.
Cash bids stood at $122 per hundredweight (cwt) versus $127 to $128 asking prices, said feedlot sources (all figures US$).
The wholesale price for choice beef Thursday morning was $1.13/cwt higher at $196.84 compared with Wednesday and select cuts were up 31 cents to $181.86, said USDA.
HedgersEdge.com estimated beef packer margin for Thursday at negative $14.35 per head, compared with negative $17.35 on Wednesday and negative $38.55 for Oct. 11, according to HedgersEdge.com.
From Monday to Thursday, packers processed 497,000 head of cattle, 5,000 less than a week earlier and 11,000 fewer than the same period a year ago.
Spot October closed up 0.1 cent per pound to 126.225 cents. December ended at 128.05 cents, 0.45 cent higher.
CME feeder cattle closed weaker amid profit as corn prices rallied, raising feed input costs.
Spot October feeder cattle closed down 0.1 cent to 146.85 cents/lb. Most-actively traded November ended at 149.125 cents, down 0.15 cent.
Hogs mostly higher
December futures ended lower on caution about near-term cash hog price direction while the 2013 contracts advanced on bearish spreading amid tight supply expectations.
"After corn rallied, the money flowed out of front-month hogs into the deferreds with the thought hog farmers will feed fewer animals which could further tighten supplies," a trader said.
December closed 0.325 cent/lb. lower at 78.85 cents. February ended at 85.325 cents, up 0.35 cent and April settle 0.85 cent higher at 90.85 cents.
The average hog price in the Iowa/Minnesota market Thursday morning was up $1.04/cwt to $81.79 after being down $1.48 the night before.
— Theopolis Waters writes for Reuters from Chicago.
