Chicago Mercantile Exchange (CME) live cattle futures closed higher on Friday on signs the cash cattle and wholesale beef markets may be stabilizing after a recent slide, traders and analysts said.
“It looks like cash and even wholesale beef may be bottoming out. There is nothing certain but it appears they’re close to a low,” said Dennis Smith, a broker for Archer Financial.
Feeder cattle futures also gained in step with the uptrend in cattle and on the plunge this week in Chicago Board of Trade (CBOT) corn futures, which boosted demand for young cattle to place on feed in U.S. Plains feedlots.
CME live cattle for August delivery were up 0.150 cent at 121.800 cents per lb, and October was up 0.350 cent at 125.850.
“The August contract has just been on a seesaw, with resistance at $123 and support at $121, just back and forth, so that would indicate a low is maybe in,” Smith said.
The range for August on Friday was from 121.750 to 122.350 cents per lb.
The U.S. Department of Agriculture (USDA) on Friday said choice wholesale beef traded at $187.01 per hundredweight, down 65 cents from late Thursday. “Beef is over $25 off the recent highs, so you would think it’s nearing a bottom,” Smith said.
Choice wholesale beef carcasses traded at a record high of more than $210 per hundredweight in late May.
Cash cattle in Texas and Kansas moved at $119 per hundredweight, steady with last week, feedlot sources said.
Cattle in Nebraska traded at $120.25, up 25 cents from a week ago, they said.
Packers bought cattle early in the week, which suggests they need supplies, a trader said.
Estimated margins for U.S. beef packing companies were a positive $26.20 per head on Friday, up from a positive $19.00 on Thursday but below the positive $32.40 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
CME August feeder cattle were up 0.250 cent at
152.600 cents per lb, and September was up 0.225 cent at
Gains in the cattle market lent support to feeders, but a lot of the strength came from this week’s plunge in corn futures and expectations for further declines if the U.S. crop, as forecast, reaches a record high.
CBOT old-crop September corn fell nearly 10 per cent this week, the biggest one-week drop ever for that contract, and new-crop December corn fell to a 2-1/2 year low.
Lean hog futures sagged on expectations for cash hogs to begin weakening, with the deferred hog futures contracts hit hardest due to prospects for a record corn crop that likely will trigger an expansion of the U.S. hog herd as feed prices tumble.
CME August lean hog futures closed 0.800 cent lower at 97.775 cents per lb, and October was down 1.175 at
“Cash hog markets are expected to come down, but the big news is the far deferreds, the April and May,” Smith said.
“Everyone is expecting a big expansion for hog production with this record corn crop coming on.”
Cash hog markets in the U.S. Midwest on Friday were steady to 50 cents per hundredweight higher, with fresh pork prices supportive for the first time in four days, dealers said.
However, packers continued to cut back on the number of hogs they slaughter and trim operating hours in an effort to manage falling cash margins.
Estimated margins for U.S. pork packing companies were a negative $5.05 per head on Friday, compared with a negative $4.35 on Thursday and a negative $5.00 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.