U.S. livestock: Cattle firm on discount to cash trades

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures climbed to a roughly 1-1/2 year high on Thursday, boosted by gains in cash cattle prices that widened futures’ discount to the cash market, dealers said.

Feedlots bought a small number of cattle in Nebraska at $128/cwt, up $2 from last week (all figures US$). CME April live cattle futures were trading at an equivalent of about $125/cwt and June cattle at about $115/cwt.

“We discounted the futures market last fall and since then, futures have been continuously behind the spot (cash) market,” said Steiner Consulting Group analyst Altin Kalo.

Some traders expected weaker trades in U.S. cash cattle markets this week and the higher values prompted gains in futures. “We started on a weak foot and rocketed back higher,” Kalo added.

Investors were exiting shorts or liquidating longs in April live cattle before it expires at the end of the month. The contact finished 1.175 cents higher at 125.375 cents per pound, highest since Nov. 12, 2015.

Most-active June live cattle gained 0.35 cent, to 114.7 cents/lb., off the earlier life-of-contract high 115.525 cents. CME May feeder cattle were 0.575 cent higher at 138.4 cents per pound.

CME lean hog futures fell to the lowest levels since December before turning higher. Most-active June lean hogs settled 0.225 higher at 72.5 cents/lb.

Hogs had drifted lower for weeks, weighed down by higher U.S. hog production that pressured hog prices in cash markets.

Kalo said some investors likely were bargain hunting on expectations that U.S. meat prices will begin to rise amid demand for outdoor grilling, potentially triggering more aggressive buying of hogs by pork packers.

“(Traders are) testing to see where the bottom (in hog futures) is going to be before they get bullish for the summer market,” he said.

CME livestock futures trading will be closed on Friday for the Good Friday holiday.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago.

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