U.S. livestock: CME live, feeder cattle repeat record highs

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures on Thursday rose to a record high for a second consecutive session, supported in part by improved wholesale beef prices, traders said.

October closed 0.375 cents per pound higher at 162.85 cents, and December up 0.525 cent to 166.425 cents (all figures US$).

Thursday morning’s choice wholesale beef price, or cutout, gained 36 cents per hundredweight (cwt) from Wednesday to $238.50. Select rose 95 cents to $228.13, the U.S. Department of Agriculture said.

The shortage of lean cuts used to produce ground beef may have boosted beef cutout values, a trader said.

Another market participant said packers charged grocers more for beef to offset their unprofitable margins and justify possibly paying at least steady prices for cattle this week.

Beef packer margins for Thursday were a negative $71.90 per head, compared with a negative $74.25 on Wednesday and a negative $85.95 a week ago, according to Colorado-based analytics firm Hedgersedge.com.

Packers are hesitant about spending more for cattle as they cope with margin issues by cutting slaughters and drawing on animals contracted against the futures market.

Last week, cash cattle in Nebraska moved at $157 to $159/cwt, with sales of $158 in Kansas, said USDA.

Monday is the first notice day for deliveries, which at times prompted some investors to sell the October contract and simultaneously buy back months in a trading strategy known as bear spreading.

CME feeder cattle contracts ran their streak of record highs to five days, with help from fund buying and live cattle market advances.

October closed 2.675 cents/lb. higher at 241.1 cents, and November climbed 2.025 cents to 240.075 cents.

Hogs mostly firm

CME hog futures closed mostly firm as investors implemented bear spreads while waiting for the government’s afternoon direct cash hog prices.

October hogs closed 0.825 cent/lb. lower at 106.775 cents. December ended up 0.05 cent to 94.925 cents, and February at 91.95 cents, up 0.1 cent.

Thursday morning’s average hog price in Iowa/Minnesota was up 42 cents/cwt from Wednesday to $109.11 but dropped 48 cents in the eastern Midwest to $102.38, USDA said.

Profitable margins and solid wholesale pork demand encouraged packers to keep a floor beneath cash prices, traders said.

USDA’s data showed the afternoon’s wholesale pork price gained 57 cents/cwt from Wednesday to $122.37.

But farmers are moving hogs to market ahead of schedule to avoid potentially lower prices as supplies increase seasonally.

Packers on Thursday processed 423,000 hogs, up 11,000 from last week, according to USDA.

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

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