U.S. livestock: CME live cattle post gains, but off record high

Chicago Mercantile Exchange live cattle on Thursday finished in the plus column for a third straight day on profit-taking but off record highs, traders and analysts said.

February live cattle closed 0.725 cents per pound higher at 140.15 cents, after hitting a new contract high of 141 cents in electronic trading (all figures US$).

April finished at 139.225 cents, up 0.275 cent. It peaked at a fresh contract high of 139.825 cents.

Futures lagged behind this week’s record-breaking cash prices, fuelled by similar moves in wholesale beef values, in anticipation of both markets topping out soon.

“There are signs that maybe this is a little too far, too fast,” said Allendale Inc. chief strategist Rich Nelson.

As of Thursday, cash cattle in the U.S. plains moved at $142 to $144 per hundredweight (cwt), shattering last week’s $140 record, feedlot sources said.

The morning’s wholesale choice beef price was $227.52/cwt, which rose $2.90 from Wednesday to its sixth straight record, according to U.S. Department of Agriculture data.

The $224.46 morning select cuts price was up $2.55 from Wednesday and extended its record streak to 10 straight days.

Scarce cattle forced packers to pay more for supplies while passing that cost on to grocers and restaurants, analysts and traders said.

They said retailers likely needed beef to feature after the year-end holidays and restock coolers after last week’s winter storm.

Intended packing plant cutbacks to offset tight supplies and improve their margins appear to have paid off.

Beef packer margins for Thursday were estimated at a positive $27.80 per head, their best since a positive $29.70 on Aug. 23, as calculated by HedgersEdge.com.

CME feeder cattle slipped from a record high on profit taking in response to the gradual pullback in live cattle futures.

January feeder cattle closed at 169.8 cents/lb., up 0.4 cent. It marked a new contract high of 170.25 cents. March finished at 168.25 cents/lb., up 0.225 cents.

Hogs up on demand optimism

CME hog futures ended higher in anticipation of a cash price and wholesale pork demand turnaround, traders and analysts said.

Pork could benefit from high beef costs, Nelson said. And packers should be finishing up hogs that had backed up on farms during harsh weather last week, he added.

Government data on Thursday morning showed the wholesale pork price at $86.01/cwt, $1.05 higher than on Wednesday.

The morning’s average price of hogs in the closely-watched Iowa/Minnesota market was $2.43/cwt lower from Wednesday at $76.12, according to USDA.

Bearish spreads limited February futures’ advances but lifted the April contract beyond the 40-day moving average of 91.84 cents, which triggered fund buying.

February hogs closed at 86.875 cents/lb., up 0.275 cent, and April ended at 92.25 cents, 0.7 cent higher.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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