Chicago | Reuters — Chicago Mercantile Exchange live cattle posted their biggest one-day percentage increase in six months on Tuesday, driven up over two per cent by bargain hunting, traders said.
Speculative buying and short-covering helped boost nearby trading months to their three-cents-per-pound price limit, which will result in an expanded limit to 4.5 cents on Wednesday (all figures US$).
February and April settled at 152.825 cents and 151 cents/lb., respectively.
Futures benefited from discounts to last week’s prices for market-ready (cash) cattle. But thinning margins and lacklustre wholesale beef demand could pressure cash returns this week.
Last week, cash cattle in the U.S. Plains traded at $158 to $160 per hundredweight (cwt), feedlot sources said.
Tuesday morning’s choice wholesale beef price sagged $1.71/cwt from Monday to $249.70. Select slumped $2.23/cwt to $242.56, the U.S. Department of Agriculture said.
The blizzard in the U.S. Northeast delayed deliveries of meat to buyers and will likely hurt restaurant business in the region, traders and analysts said.
Meanwhile, possible signs of progress in labour talks involving West Coast port workers encouraged futures investors. The prolonged work slowdown created congestion at those ports that significantly delayed exports of U.S. goods, including meat.
“It’s really been within the past couple of months that impact from the congestion has started to escalate, with pork more affected than beef because it has a shorter shelf life,” said U.S. Meat Export Federation CEO Phil Seng.
CME feeder cattle January contract slipped before its expiration on Thursday, while remaining months drew support from weaker corn prices and live cattle market buying.
January closed 0.875 cent lower at 210.775 cents/lb., March ended 3.85 cents higher at 203.825 cents and April finished at 205.225 cents, up 4.125 cents.
Hogs slide late
CME lean hogs settled lower on profit-taking and lower wholesale pork prices that pared early-session futures advances, traders said.
February closed 1.4 cents/lb. lower at 69.425 cents, and April down 0.6 cent to 72.05 cents.
USDA data showed the morning’s wholesale pork price had fallen $1.73 from Monday to $82.74/cwt, with prices down for all categories except pork bellies.
Weather problems out East and labor challenges in the West may be hurting packers’ ability to move pork, a trader said.
Tepid wholesale pork demand may continue to delay the seasonal turnaround in cash prices, he said.
Cash prices in the Midwest on Tuesday morning sold steady to 50 cents/cwt lower from Monday, regional hog dealers said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.