Chicago | Reuters — Chicago Mercantile Exchange live cattle futures set a record high for the third consecutive session on Thursday as producers held out for higher prices from meatpackers searching for supplies, brokers said.
Strong cash prices and tightening supplies have pushed futures above a 2014 record for the front-month contract, after ranchers reduced herds due to high feed costs and drought in the western U.S.
Prices may still reach new peaks as supplies are expected to decline further in the second half of the year, analysts said.
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“We’re already in record high territory and this is early in the game,” said Cassie Fish, an analyst and beef industry expert.
April live cattle futures touched a record of 177.7 cents/lb. for a front-month contract before ending up 1.225 cents at 175.5 cents/lb. (all figures US$). June live cattle finished 0.35 cent lower at 164.5 cents/lb. after reaching a life-of-contract high of 166.275 cents.
CME feeder cattle futures also set contract highs before finishing mostly lower.
Some cattle traded in the cash market for about $180-$181 per hundredweight (cwt) in Nebraska and Iowa this week, up from about $175/cwt last week, brokers said. However, cattle feeders were declining packers’ offers for $183/cwt and holding out for even higher prices.
Cattle in states like Nebraska have suffered through harsh cold and snowy weather that slowed their weight gain. These conditions contributed to smaller-than-expected supplies of animals available for slaughter, brokers said.
Still, meatpackers are making money processing cattle into beef amid solid consumer demand.
Estimated margins for processors hit $86.85 per head of cattle, up from $66.80 on Wednesday and $80.75 a week ago, HedgersEdge.com said. Prices for choice and select cuts of boxed beef increased, the U.S. Department of Agriculture said.
In the pork market, CME April lean hogs set a contract low of 71.5 cents/lb. before finishing 0.7 cent lower at 71.6 cents/lb. Most-active June was down a third day, touching a contract low of 85.425 cents/lb. before ending at 85.65.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
