Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled firm on Thursday as investors adjusted positions ahead of the government’s annual cattle inventory report that will be released on Friday, traders said.
Analysts expect Friday’s data to show the U.S. cattle herd likely fell for a seventh straight year, but the rate of that decline possibly slowed and suggests ranchers are rebuilding their herds as feed costs ease..
The U.S. Department of Agriculture’s cattle inventory report will be released Friday at 2 p.m. CT.
Thursday afternoon’s wholesale choice beef price, or cutout, was $230.75 per hundredweight (cwt), $1.06 lower than on Wednesday (all figures US$). Select cuts fell 64 cents to $229.79, according to U.S. Department of Agriculture data.
Despite lower wholesale beef prices in recent days, packer margins remain in the black, said Domenic Varricchio, a commodities broker at Schwieterman, Inc.
“Even with the break in the choice beef, they can still afford to buy (cattle), but we are seeing a correction in the beef,” Varricchio said.
Traders and analysts await more cash cattle trade after a light number of cattle traded in Texas at $146/cwt earlier in the week. Bids stood at $146 to $147/cwt against asking prices of $150, feedlot sources said.
Last week, most cattle in the U.S. Plains sold up to $150, a record high.
USDA estimated cattle slaughter at 453,000 head so far this week, 18,000 less than the same period in the previous week.
“The kill is light and we are expecting it to get lighter, that should keep boxed beef prices elevated in the long term,” Varricchio said.
February live cattle closed up 0.075 cent/lb. at 142.15 cents. April ended flat at 140.525 cents and June finished up 0.15 cent at 132.225 cents.
CME January feeder cattle ended down 0.125 cent/lb. at 171.675 cents. Jan. 30 is the last trade day for the contract.
Remaining feeder cattle contracts were pressured by stronger corn prices.
March ended 0.525 cent lower at 168.7 cents, and April finished down 0.375 cent at 169.1 cents.
Front month hogs slip, deferred months rise
CME hog futures were pressured as front-month February traded at a premium to the CME hog lean index of 81.48 cents and cash hogs prices remained lacklustre, traders said.
February hogs closed down 0.15 cent at 86.375 cents/lb. and April ended down 0.175 cent at 93.625 cents/lb.
Government data on Thursday afternoon showed the wholesale pork price at $91.49/cwt, up $1.62 from Wednesday.
Temporary weather-induced packing plant closures combined with some farmers cancelling hog movement crimped slaughter pace during the week. USDA estimated Thursday’s hog slaughter at 385,000 head, 49,000 fewer than a week ago and down 35,000 from a year earlier.
There was talk of increasing Saturday slaughter to compensate for lost production during the week. Saturday’s kill was estimated at about 145,000 head.
Speculation that the spread of the porcine epidemic diarrhea virus, which is fatal to baby pigs, could hurt pork production this summer sent the June and July contracts to highs.
Confirmed cases of the deadly virus spreading across the U.S. hog belt jumped by 215 to its highest weekly increase since it was discovered in the country in April 2013, according to USDA’s National Animal Health Laboratory Network.
— Meredith Davis reports on livestock commodity markets for Reuters from Chicago.