Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rallied on Friday as cash cattle at U.S. Plains feedlot markets traded at higher prices amid rising beef values and robust packer margins, traders said.
Milder temperatures around much of the country following an unusually chilly stretch of early spring weather is lifting demand for beef for outdoor cookouts. Spring holidays like Memorial Day and Mother’s Day typically also propel beef sales.
“Demand is really starting to ramp up and the packers have larger slaughter schedules planned,” Cassie Fish, an analyst and author of blog The Beef.
CME April live cattle settled 1.925 cents/lb. higher at 124.45 cents and June futures jumped 2.65 cents, to 107 cents/lb., a one-month high (all figures US$).
The June contract posted the strongest gains of any month due to its historically large discount to spot-month futures and to cash cattle prices.
Futures ramped up around midday as reports circulated of cash cattle trade in Kansas and Texas feedlot markets at mostly $124/cwt, up $3 from a week earlier, according to traders. Cattle in Nebraska sold at $124-$126/cwt, compared with prices from $119-$124 last week.
Cattle traders are expecting a significant increase in market-ready cattle supplies in the coming weeks, but packer demand for the animals is strong now, Fish said. Cold weather had slowed weight gains at northern feedlots so marketings available to packers are about three weeks behind schedule, she said.
The choice boxed beef cutout price gained another $1.59 on Friday to $221.74/cwt, up $9.76 from a week ago, according to USDA.
Feeder cattle rallied with live cattle, with May up 1.725 cents/lb. at 142.025 cents and August up 1.75 cents at 148.25 cents.
Lean hog futures declined on weak cash prices and chart-based selling.
CME May hogs closed 1.225 cents/lb. lower at 66.1 cents. Actively traded June futures fell 1.375 cents to 72.625 cents/lb., a three-week low and its sixth drop in seven days.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago.