Chicago | Reuters — U.S. live cattle futures closed mostly higher on Tuesday as frigid conditions gripped the U.S. Plains and Midwest, limiting the movement of animals into meat plants and threatening to reduce cattle weights, traders said.
However, rallies were limited as wintry weather and power outages prompted meat-packing plants to slow the slaughter pace, curbing demand for market-ready cattle.
The U.S. Department of Agriculture reported Monday’s cattle slaughter at a revised 79,000 head, a significant drop from 114,000 head a week earlier and 106,000 a year ago.
A spokeswoman for Tyson Foods, the biggest U.S. meat company by sales, said the firm had suspended or scaled back operations at some facilities.
Benchmark April live cattle futures on the Chicago Mercantile Exchange settled up 0.625 cent at 125.8 cents/lb., paring gains after reaching a contract high at 126.7 cents, while the spot February contract ended down 1.05 cents at 116.15 cents/lb. (all figures US$).
Traders were unwinding long February/short April spread positions, analysts said.
CME March feeder cattle finished down 0.075 cent at 140.775 cents/lb.
Traders expected a sustained cold spell in the Plains to result in lower cattle weights, potentially curbing beef supplies.
“This severe cold over a long period of time will accelerate weight declines from what has been a historic high. It is difficult, if not impossible, to quantify how much tonnage will disappear from the marketplace as a result,” analyst Cassie Fish wrote in The Beef, a daily industry blog.
Prices for choice cuts of boxed beef rose $2.33, to $234.77/cwt, on Tuesday, while select cut prices rose 62 cents, to $222.03/cwt, according to USDA.
The National Weather Service posted wind chill advisories Tuesday night across much of Nebraska and Kansas, and storms were expected to bring snow to the Texas Panhandle.
CME hog futures closed higher. The most-active April contract ended up 0.975 cent at 86.175 cents/lb. but stayed inside of Friday’s trading range.
The cash pork carcass cutout value fell $1.55, to $89.71/cwt.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.