U.S. livestock: Cash outlook drives CME live cattle higher

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished sharply higher on Thursday, driven by short-covering and recent run up in wholesale beef prices, traders said.

April ended 1.525 cents/lb. higher at 138.3, and June closed up 1.325 cents/lb. to 127.625 (all figures US$).

The morning’s wholesale choice beef price climbed $1.36/cwt from Wednesday, to $225.18. Select cuts were up 17 cents, to $213.81, the U.S. Department of Agriculture said.

Fewer cattle for sale, as supermarkets purchase meat for post-Easter holiday barbecues, propped up the beef cutout value, traders and analysts said.

They said strong wholesale beef demand, improved packer margins and tighter cattle supplies bode well for market-ready, or cash, cattle prices by Friday.

On Tuesday, packers in Texas paid $136/cwt for cash cattle, with unsold animals there and in Kansas priced at $138.

“Tuesday’s sales suggests packers need cattle. But, the same thing (optimism) happened last week, only to see that bubble burst by Friday,” a trader said.

Thursday’s average beef packer margin was a negative $15.55 per head, up from a negative $40.05 on Wednesday, as calculated by HedgersEdge.com.

Funds trading in CME’s livestock markets at times shifted April long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Thursday was the fourth of five days for the S+PGSCI roll process.

CME feeder cattle surged to a two-month high on fund buying and live cattle market gains. March closed 2.5 cents/lb. higher at 161.55 cents.

Firm hog futures close

Fund rolling limited April CME lean hog gains but lifted some deferred months to fresh contract highs, traders said.

April closed up 0.075 cent/lb. to 72.175 cents. May ended 0.4 cent higher at 79.35 cents, and marked a new contract high of 79.575 cents. June finished up 0.35 cent to 82.9.

Traders said the morning’s weak cash and wholesale pork prices minimized April hog futures advances.

Thursday morning’s average cash hog price in Iowa/Minnesota slumped $1.14/cwt from Wednesday to $63.40, USDA said.

The morning wholesale pork price on Thursday declined 39 cents/cwt from Wednesday to $75.54, based on government data.

Hog supplies are tight, but there are enough available through early next week to accommodate packer and retail demand, a Midwest hog dealer said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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