U.S. livestock: Cash price optimism underpins CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed firmer on Thursday, helped by expectations that cash prices will hold steady or rise by Friday, said traders.

June live cattle closed up 0.175 cent/lb. at 123.2 cents, and August rose 0.125 cent to 118.85 cents (all figures US$).

Packers in the U.S. southern Plains have not budged after bidding $125/cwt for market-ready, or cash, cattle priced at over $130 per cwt, according to feedlot sources. Last week, cash cattle in the Plains fetched $124-$132.50.

“Retailers are still interested in beef for Father’s Day and Fourth of July grilling, which is a plus for packer margins and cash prices this week,” a trader said. Father’s Day falls on June 19 this year.

The morning’s choice beef price was at $226.90/cwt, up $1.80 from Wednesday. Select cuts climbed $2, to $202.28, the U.S. Department of Agriculture said.

Beef packer margins for Thursday, on average, were a positive $46.75 per head, down from a positive $47.50 on Wednesday and a positive $58.45 a week ago, as calculated by HedgersEdge.com.

Market participants tracked forecasts for hot weekend weather that could slow down gains in animal weight, which could delay cattle deliveries to packers.

CME feeder futures were pressured by profit-taking but supported by modest cattle futures gains. August closed down 0.075 cent/lb. to 147.3 cents, and September finished up 0.1 cent, to 145.475 cents.

Uneven hog market close

Anticipation that seasonally tight supplies will ultimately provide fundamental market support lifted the June CME lean hog contract, traders said.

They said futures’ premiums to CME’s hog index for May 7 dropped the July trading month.

Spot June, which will expire on Tuesday, closed 0.625 cent/lb. higher at 82.675 cents, and July ended one cent lower at 86.025 cents.

Traders eyed near-term fundamentals that suggest the recent run-up in cash and wholesale pork prices may be about to end.

Thursday morning’s wholesale pork price fell 91 cents/cwt from Wednesday to $87.83/cwt, USDA said.

Government data on Thursday showed the morning average cash hog price in Iowa/Minnesota slipped 12 cents/cwt from Wednesday to $78.16 in light sales volume.

“It’s like anything else: you can’t expect cash prices to go up everyday. At some point we’re going to level off or set back for a day or two,” an Iowa hog dealer said.

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

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