U.S. livestock: CME live cattle set record high with beef prices

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures reached a new high on Tuesday, fueled by short-covering as beef prices sustained their record pace, traders and analysts said.

Tuesday morning’s wholesale choice beef price was $239.57 per hundredweight (cwt) in light sales volume, leaping $3.01 from Monday to its ninth consecutive record, according to U.S. Department of Agriculture data (all figures US$).

Select cuts captured their 13th straight record after surging $2.57 in price to $237.02.

Expensive beef will likely force retailers to feature more pork and chicken, independent CME livestock futures trader Dan Norcini said.

“Consumers are not going to be able to afford beef at these prices. They will move to ground beef or cheaper cuts, but the high-end stuff is going to suffer,” he said.

Grocers were short after the New Year’s and Christmas holidays, and bought product in a market where cattle supplies were already tight.

Plant closures during the year-end holidays and winter weather disruptions led to fewer cattle for processing. Another storm is making its way from the Midwest to the Northeast.

And packers hiked beef costs to grocers to offset record-high cattle prices and recoup lost margins.

Last week, cash cattle in the U.S. Plains traded up to $144/cwt, shattering the prior week’s $140 record, feedlot sources said.

Beef packer margins for Tuesday were estimated at a positive $102.85 per head, compared with a positive $76.40 per head on Monday and a negative $24.80 a week ago, as calculated by HedgersEdge.com.

February live cattle closed 1.2 cents/lb. higher at 141.55 cents, after posting a new contract high of 141.9 cents.

April finished at 140.225 cents, up 0.925 cent. It posted a fresh contract high of 140.65 cents.

January CME feeder cattle futures closed at 169.8 cents/lb. down 0.2 cents, on steady-to-weak cash feeder cattle prices in local markets.

Remaining contracts drew support from higher live cattle futures.

March finished at 168.325 cents/lb., up 0.4 cent, and April settled 0.625 cent/lb. higher at 169.275 cents.

Most hogs gain as specs buy

CME hogs finished higher as traders sold the February contract and bought back months with the U.S. pig virus in mind, a trader said.

Speculators purchased spring and summer 2014 hog contracts with the belief that the spread of the porcine epidemic diarrhea virus, which is deadly to baby pigs, will reduce the number of hogs at that time.

The downturn in wholesale pork prices and uneasiness about cash hog prices in the near term further pressured February hog futures, the trader said.

Government data on Tuesday morning showed the wholesale pork price at $87.09/cwt, $1.06 lower than on Monday.

USDA’s morning’s direct hog market prices were not available. Hogs in the Midwest traded steady as treacherous road conditions in the eastern half of the country hampered the movement of animals to market, according to hog dealers.

February hogs closed at 85.975 cents/lb., down 0.2 cent. April ended at 92.375 cents, up 0.475 cent and June finished at 101.85 cents/lb., 0.275 cent higher.

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

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