U.S. livestock: CME live cattle futures surge by 3-cent/lb price limit

(Photo courtesy Canada Beef Inc.)

Chicago / Reuters – Chicago Mercantile Exchange live cattle futures settled up by their 3-cents-per-lb daily price limit on Monday, driven by fund buying and Friday’s mildly bullish government monthly cattle report, said traders.

August and October live cattle closed at 112.950 cents and 111.075 cents per lb, respectively. Live cattle’s trading limit will be expanded to 4.5 cents on Tuesday.

Short-covering and bargain hunters contributed to the two-day market rally that also featured futures’ discounts to last week’s cash prices.

Last week the bulk of market-ready, or cash, cattle in the southern U.S. Plains traded at $115 per cwt, down $2 from the previous week, said feedlot sources.

Despite their healthy margins, packers balked at paying more for cattle given seasonally lackluster beef demand and readily available pork and chicken, said analysts and traders.

Average beef packer margins for Monday were a positive $28.65 per head, up from a positive $25.30 on Friday, as calculated by HedgersEdge.com.

“I think cash and futures markets are poised to put in a seasonal bottom, helped by a potential turnaround in beef demand,” said AgriVisor Services analyst Dale Durchholz.

Hot summer weather has hurt grilling and curbs consumers’ appetites for heavy meals.

Durchholz pointed out that beef demand usually picks up around late July or early August as retailers gear up to feature it for Labor Day holiday cook-outs on Sept. 5. The return of students to school from summer vacations gives an added boost to meat demand for indoor meal preparations, he added.

The morning’s choice beef price fell $1.43 per cwt from Friday to $198.66. Select cuts were down 17 cents to $189.40, the USDA said.

Live cattle futures buying and steady-to-higher cash feeder cattle prices pushed up CME feeder cattle contracts by the 4.5-cents per lb limit. August feeders closed at 141.700 cents. The limit will be expanded to 6.750 cents on Tuesday.

Firm hog futures settlement

CME lean hogs benefited from their discounts to the exchange’s hog index for July 21 at 77.13 cents and limit-up cattle market advances, said traders.

August hogs finished 0.400 cent per lb higher at 75.675 cents, and October ended 0.450 cent per lb higher at 64.350 cents.

The seasonal decline in hog prices capped futures advances.

Cash hog prices in the Midwest on Monday morning were mostly 50 cents per lb weaker on ample supplies, said Midwest hog merchants.

Editing by James Dalgleish

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