U.S. livestock: CME live cattle score new high with cash, beef prices

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures hit a new high on Wednesday, fuelled by similar moves in cash and wholesale beef prices, traders and analysts said.

Cash, or slaughter-ready, cattle in Texas and Kansas traded at $147 per hundredweight (cwt) on Wednesday, surpassing last week’s $142 record in both states (all figures US$).

The morning’s wholesale choice beef price was $240.73/cwt, rising $1.01 from Tuesday to its 10th straight record, according to U.S. Department of Agriculture data.

Select cuts gained 17 cents to $237.32 for their 14th record in a row.

“It’s all about supply and demand,” said a feedlot source who cited a “perfect storm” of factors that led to the day’s cash-price record.

Retailers ran short of beef at a time when fewer cattle came to market during bouts of winter weather that slowed down animal weight gains, he said.

Cattle numbers were already tight after years of drought in parts of the United States reduced the herd to its lowest level since the early 1950s, he added.

Much-improved margins, thanks in part to sharply higher wholesale beef prices, gave processors the wherewithal to pay more for cattle.

Beef packer margins for Wednesday were estimated at a positive $125.95 per head, compared with a positive $102.85 per head on Tuesday and a positive $3 a week ago, as calculated by HedgersEdge.com.

Traders await USDA’s monthly cold storage report on Wednesday at 2 p.m. CST (2000 GMT). The data will include total December beef and pork inventories.

February live cattle closed 2.125 cents/lb. higher at 143.675 cents, after posting a new contract high of 144.55 cents in electronic trading.

April finished at 141.8 cents, up 1.575 cents. It posted a fresh contract high of 143.2 cents.

CME feeder cattle futures hit a record high with live cattle futures and buy stops.

January closed at 170.475 cents/lb., 0.675 cent higher and made a new contract high of 170.575 cents.

March finished at 170.375 cents/lb., up 2.05 cents, after posting a fresh contract high of 170.8 cents.

Most hogs up on spreads

CME hogs finished mostly higher after investors sold the February contract and bought deferred months in response to record-heavy hog weights, traders said.

February hogs closed at 85.55 cents/lb., down 0.425 cent.

April ended at 92.975 cents, 0.6 cent higher, and June finished at 102 cents/lb., up 0.15 cent.

Cash and wholesale pork values could feel pressure from hogs that became heavier after backing up on farms after back-to-back weeks of harsh weather, traders and analysts said.

The morning’s average hog price in the western Midwest direct market slipped 18 cents/cwt to $78.87, according to USDA.

Government data on Wednesday morning showed the wholesale pork price at $86.63/cwt, 75 cents lower than on Tuesday.

Speculators bought summer hog contracts amid concern that the spread of the porcine epidemic diarrhea virus, which is fatal to baby pigs, would hurt hog production during that
period.

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

About the author

explore

Stories from our other publications