U.S. livestock: Big chill moves CME live cattle to record highs

Chicago Mercantile Exchange live cattle futures, on a lead-month chart basis, notched a new high for a fourth straight session on Monday, partly driven by arctic air that disrupted livestock production in parts of the country, traders said.

Treacherous travel conditions in the Midwest snarled the delivery of cattle and hogs to meat packers such as Cargill and Tyson Foods.

And cattle are less available to processors as extreme wind chills halted or slowed down cattle weight gains.

Futures were already trying to catch up to cash cattle prices that last week climbed to record highs, traders said.

Last Friday, most cash cattle in the U.S. Plains traded at $137 per hundredweight (cwt), besting the previous week’s $133 to $136 record, feedlot sources said (all figures US$).

Packers were short-bought cattle after back-to-back holidays. And despite their fading margins, processors needed supplies for the first full week of production in 2014.

Beef packer margins for Monday were estimated at a negative $100.05 per head, compared with a negative $95.10 per head on Friday and negative $88.25 a week ago, as calculated by HedgersEdge.com.

Whether packers will continue to keep pace with record-high cash prices is questionable given their deteriorating margins and worries about beef demand moving forward.

“This cold weather is going to dampen consumer buying and the movement of product from the packer to restaurateurs and grocers,” said Livestock Marketing Information Center director Jim Robb.

The Monday afternoon wholesale price, or cutout, for choice beef rose $1.21 per cwt from Friday to $205.15, and select jumped $2.28 to $201.38, according to the U.S. Department of Agriculture.

Monday’s cutout bounce partly reflected USDA adjustments to output, or yield, value from different cuts of beef, a trader said.

And beef end users competed for beef that became scarce after plants shutdown during the Christmas and New Year’s holidays, he said.

February live cattle ended 0.525 cent per pound higher at 136.825 cents, and April finished at 136.925 cents, up 0.35 cent.

Most CME feeder cattle futures marked new contract highs supported by the higher live cattle market.

Feeder cattle for January closed at 168.025 cents/lb., up 0.4 cent.

March finished unchanged at 168.1 after hitting a new contract high of 168.75 cents in electronic trading.

April closed down 0.05 cent/lb., at 168.9 cents. It earlier posted a contract high of 169.5 cents.

Hog futures slip on cash fears

CME hog futures were weakened by concern that cash prices might suffer as temperatures in the Plains moderate later in the week, traders said.

Fewer hogs due to weather minimized hog market losses, independent hog futures trader James Burns said. But pork product sales remain a challenge, and could get worse if more hogs come to market that were backed up on farms due to weather issues.

The afternoon’s average price of hogs in the closely watched Iowa/Minnesota market was up $1.48/cwt from Friday to $79.48, according to USDA.

Monday afternoon’s wholesale pork price gained nine cents/cwt from Friday to $82.88, according to USDA.

February hogs closed down 0.05 cent/lb. at 86.625 cents, and April ended at 91.425 cents, 0.15 cent lower.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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