U.S. livestock: CME live cattle up as cash beef prices set new highs

Chicago Mercantile Exchange live cattle futures gained moderately on Friday, and posted advances for a fifth straight week, as cash and wholesale beef prices again set new highs, traders said.

On Friday, cash cattle in the U.S. Plains traded at $139 to $140 per hundredweight (cwt), topping last week’s record of $137 to $138, feedlot sources said (all figures US$).

The afternoon’s wholesale price, or cutout, for choice beef was $214.98/cwt, up $2.93 from Thursday’s record high, according to the U.S. Department of Agriculture.

At 211.58 cents/cwt on Friday, select cuts jumped $2.53 from Thursday and extended its record streak for a sixth straight day.

Recent harsh weather further squeezed already tight supplies that put cattle and wholesale beef prices on their record-setting pace, analysts said.

“Beef keeps going up and last week’s record prices emboldened feedlots this week. I don’t know where the upward movement is going to stop,” said Oak Investment Group president Joe Ocrant.

Higher beef costs for retailers and restaurants helped improve packer operating margins.

Beef packer margins for Friday were estimated at a negative $46.25 per head, compared with a negative $57.55 per head on Thursday and negative $95.10 a week ago, as calculated by HedgersEdge.com.

February live cattle closed 0.15 cent/lb. higher at 136.7 cents, and April finished at 136.975 cents, up 0.1 cent.

Higher corn prices following USDA’s bullish crop production report on Friday, dragged CME feeder cattle from all-time highs.

Costly corn could reduce feedlot demand for young cattle for fattening.

January feeder cattle closed at 168.65 cents/lb., 0.5 cent lower. March finished at 167.65 cents/lb., down 1.175 cents.

Hog futures up despite lower cash

CME hogs finished higher as short-covering and fund buying offset bearish cash hog and wholesale pork prices, traders said.

The afternoon’s average price of hogs in the closely watched Iowa/Minnesota market tumbled $2.17/cwt from Thursday to $76.08, based on USDA’s data.

Separate government data showed late-Friday’s wholesale pork price at $84.05/cwt, down 59 cents from Thursday.

Investors initially sold CME hogs with the belief that the break in wintry weather will thaw snow-packed country roads, allowing more hogs to safely reach packing plants.

Lower cash hog bids tend to pressure futures, but investors may be taking a more forward view of the market, Citigroup futures specialist Art Liming said.

“Higher grain prices may be lifting the market a little. If producers have to pay more for the grain, they are going to want more for their hogs,” he said.

February hogs closed 0.575 cent/lb. higher at 85.825 cents, and April ended at 91 cents, up 0.275 cent.

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

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