U.S. livestock: CME live cattle charge upward

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts rose for a second straight day on Wednesday, after more fund buying lifted futures which could lend support to cash prices as early as Thursday, traders said.

February closed 1.15 cents/lb. higher at 134.1, and April ended at 133.425 cents, up 1.3 cents (all figures US$).

CME’s live cattle daily trading limit will return to three cents/lb. on Thursday after the market failed to settle by its newly expanded 4.5-cent limit Wednesday.

The market appears to be looking ahead of what may be a spring cash price rally, “but the jury is still out in terms of whether cash is ready to go higher right now or not,” said West Oak Commodities analyst Tom Tippens.

Market-ready, or cash, bids in Texas stood at $131/cwt against asking prices of up to $136 there and elsewhere around the U.S. Plains, said feedlot sources. Last week, cash cattle generally brought $134.

The recent upswing of futures, and a supply shortage by some packers, bode well for cash values, said traders and analysts.

But they cautioned that cash prices have to overcome lacklustre wholesale beef demand and poor packer margins.

The morning’s wholesale choice beef price jumped $1.44/cwt from Tuesday, to $215.93. Select cuts fell 79 cents, to 208.28, the U.S. Department of Agriculture said.

Wednesday’s beef packer margins averaged a negative $42.05 per head, down from a negative $37.70 on Tuesday, as calculated by HedgersEdge.com.

Fund buying and live cattle futures’ gains pushed CME feeder cattle contracts higher. March closed 1.5 cents/lb. higher at 156 cents.

Higher lean hogs settlement

CME lean hogs drew strength from live cattle market advances along with higher cash and wholesale pork prices, traders said.

April closed up one cent/lb. at 71.15 cents, and May finished 0.95 cent higher at 76.9 cents.

The morning’s wholesale pork price climbed $1.26/cwt from Tuesday at $77.67, USDA said.

Wednesday morning’s average cash hog price in Iowa/Minnesota was $1.15 higher than on Tuesday at $63.87.

Some packers struggled to fill inventories amid tight seasonal supplies, while others have enough hogs through the balance of the week, said Midwest hog dealers.

Grocers are buying pork for immediate needs as they evaluate product sales during the Lenten season and subsequent ham needs for the Easter holiday, said traders and analysts.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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