U.S. livestock: CME live cattle hit new highs with cash prices

Chicago Mercantile Exchange live cattle futures, on a continuous lead-month chart basis, marked a record high Thursday for a second straight session after cash prices also topped last week’s record.

February ended one cent per pound higher at 135.625 cents, and April finished at 135.8 cents, up 0.5 cent (all figures US$).

On Thursday, cash cattle in Texas traded at $135 to $137 per hundredweight (cwt) compared with mostly $133.50 last week, according to feedlot sources. They said sales of $137 surfaced in Kansas versus $133 a week ago.

Some investors and traders contend packers paid more for cattle as another winter storm pounds the Midwest before heading east. Cold temperatures and heavy snowfall tend to slow down animal weight gains and snarl the transportation of animals to market.

Others argued processors actively competed for cattle that are in short supply. They added that packers need cattle for the first full slaughter week following back-to-back holidays.

“I don’t know about weather, but it was supply driven for sure. Packers came into holidays way too short bought and got caught bad,” Hales Trading Co. president David Hales said.

Retail beef demand improved after plant closures over the Christmas and New Year’s holidays reduced the availability of fresh product.

“There is a lot of excitement thinking we’re going to be able to move beef at higher prices,” KIS Futures vice-president Lane Broadbent said.

Thursday morning’s wholesale price for choice beef gained 29 cents/cwt from Tuesday to $200.94, and select rose 24 cents to $196.65, according to the U.S. Department of Agriculture.

However, snow and frigid temperatures could hurt beef sales on the East Coast, a trader said. On the other hand, end users there may have to restock their coolers after getting hit hard by wintry weather in recent weeks, he said.

CME feeder cattle futures ended mixed as the higher live cattle market stirred bullish spreads.

Feeder cattle for January closed at 167 cents/lb., up 0.3 cent, and March finished at 167 cents, down 0.4 cent.

Higher cash boosts hog futures

CME hogs climbed, led by short-covering in response to strong cash prices as packers gear up for a huge post-holiday weekend slaughter, traders said.

Industry analysts and traders estimated Saturday’s slaughter at more than 300,000 head with packers looking to make up for Wednesday’s holiday downtime.

On Thursday morning, the average price of hogs in the closely watched Iowa/Minnesota market jumped $2.27/cwt from Tuesday to $79.40, according to USDA.

“There was some speculative buying with some packers looking to put together a big kill this Saturday. A lot these packers are trying to get some product around them right now,” R.J. O’Brien hog futures trader Tom Cawthorne said.

Fund buying developed after February and April hog futures broke through their respective 20-day moving averages of 86.994 cents and 91.436 cents.

February hogs closed 1.65 cents/lb. higher at 87.075 cents, and April ended at 91.8 cents, up 1.125 cents.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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