U.S. livestock: Cash price outlook extends CME live cattle gains

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts rose for a third consecutive day on Thursday, with help from fund buying and anticipation of strong cash prices by late Friday, traders said.

February closed 1.05 cents/lb. higher at 135.15, and April ended at 134.375 cents, up 0.95 cents (all figures US$).

So far, market-ready, or cash, cattle bids in the southern Plains were at $131/cwt against offers of $136, according to feedlot sources. Last week, cash cattle fetched mostly $134.

Bullish traders said cash cattle values will benefit from this week’s future’s rally, with some packers short on supplies and beef prices about to bottom out soon.

Market bears believe packers have cut kills to avoid raising bids for cattle, which could realign their margins and generate retail beef buying.

“Steady cash prices are more in line with reality than pushing them higher this week,” said Brock Associates Inc. analyst Doug Houghton.

Packers on Thursday processed 1,000 fewer cattle than last week at 107,000 head, based on U.S. Department of Agriculture estimates.

USDA showed the morning’s wholesale choice beef price sagged 91 cents/cwt from Wednesday, to $213.44. Select cuts jumped $2.37, to $210.

The average beef packer margin for Thursday was a negative $39.20 per head, up from a negative $42.05 on Wednesday, as calculated by HedgersEdge.com.

Investors await Friday’s monthly Cattle on Feed report from USDA.

Live cattle futures buying lifted CME feeder cattle contracts. March closed 0.475 cents/lb. higher at 156.475.

Weak lean hogs close

CME lean hogs felt pressure from the pullback in cash prices and future’s premiums to the exchange’s hog index for Feb. 16 at 66.08 cents, said traders.

April closed 0.325 cent/lb. lower at 70.775 cents, and May finished down 0.15, to 76.75 cents.

Thursday morning’s average cash hog price in Iowa/Minnesota was $1.54 lower than on Wednesday in light volume at $64.13, USDA said.

A few packers reduced cash bids after buying all they need through the weekend, a trader said.

However, Midwest hog dealers said seasonally tight supplies and hefty profits may encouraged some processors to maintain at least steady cash bids in the near term.

Saturday’s forecasted 125,000-head kill, compared to around 200,000 head over the past two weeks, suggests fewer pigs are available as farmers move them to market in a timely fashion, an Indiana dealer said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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