Chicago | Reuters — U.S. cattle futures approached a one-year high on Tuesday on concerns that wintry weather in the middle of the country will temporarily tighten supplies.
Snow in states such as Kansas, Nebraska and Iowa this week is expected to slow the transportation of cattle to processing plants run by companies such as Tyson Foods and JBS, traders said.
Cattle typically do not gain weight as quickly in cold weather because they consume feed to generate body heat, which can also limit livestock supplies to packers.
“Live cattle and feeder cattle futures find support in yet another winter storm in our nation’s midsection,” said Arlan Suderman, chief commodities economist for broker INTL FCStone.
Chicago Mercantile Exchange February live cattle rose 1.25 cents, to 127.875 cents/lb., and set a contract high (all figures US$). It was the highest price for a front-month contract since February 2018.
April live cattle was up 1.275 cents at 128.45 cents/lb.
March feeder cattle futures gained 1.15 cents to 143.75 cents/lb.
“We certainly think these are valid moves today based on the weather events that are lined up this week,” said Rich Nelson, chief strategist for broker Allendale.
In the hog market, CME lean hog futures fell the daily limit of three cents. As a result, the exchange will expand the limit to 4.5 cents on Wednesday.
Futures have been under pressure lately from large hog and pork supplies and weak pork prices.
“Heavy snows in all of hog country today and tonight will further back up marketings and push back the date when we get supply returning to normal,” Nelson said.
CME April lean hogs ended down three cents at 56.525 cents/lb., a contract low.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.