Chicago Mercantile Exchange live cattle futures settled mixed on Thursday, drawing support from record-high beef prices as profit-taking weighed, traders said.
February live cattle closed up 0.025 cent per pound at 136.55 cents, and April finished down 0.1 cent at 136.875 cents (all figures US$).
“Had it not been for strong beef demand, February futures would’ve been lower,” a trader said.
The Thursday afternoon wholesale price, or cutout, for choice beef moved $1.92 per hundredweight (cwt) higher from Wednesday to $212.05. It surpassed the previous record of $211.37 in May 2013, based on U.S. Department of Agriculture data.
That data showed select cuts climbed $1.98 to $209.05, notching the fifth record in as many days.
Packers charged end users more for beef to offset record-high cattle costs driven by wintry weather that disrupted production, analysts and economists said.
Years of drought in parts of the country forced cattle ranchers to downsize the U.S. herd to the smallest since the early 1950s, they said.
Fewer cattle is the primary factor behind record cattle and beef prices, said University of Missouri economist Ron Plain.
Cash cattle bids in the Southern Plains were at $135/cwt and $138 in Nebraska, against asking prices of $140, feedlot sources said. They said cash cattle last week fetched up to $138, a new record.
Packers may balk at spending more for cattle due to their improving but still negative margins and ample number of cattle up for sale this week.
CME feeder cattle, on a lead-month continuous basis, hit a new high as corn prices moved lower.
January feeder cattle closed at 169.150 cents/lb., 0.675 cent higher. March finished at 168.825 cents/lb., up 0.275 cent.
Cash jitters weaken hog futures
Investors sold CME hogs in anticipation of increased supplies as temperatures moderate across much of the Midwest, traders said.
February hogs closed down 0.325 cent/lb. at 85.25 cents, and April ended at 90.725 cents, 0.375 cent lower.
“Packers need a few hogs for the kill on Saturday to make up for lost production due to the storm earlier in the week that stranded pigs on farms,” a trader said. “After that, a glut of hogs could drag down cash prices.”
The afternoon’s average price of hogs in the western Midwest dropped 67 cents/cwt from Wednesday to $77.55, but jumped $1.36 in the eastern region to $77.46, according to USDA data.
Year-end holiday plant closures and recent bouts of dangerous weather limited the amount of pork available to end users who competed for product at higher prices.
The afternoon’s wholesale pork price was $1.38/cwt higher than on Wednesday at $84.64/cwt, according to USDA.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.