U.S. livestock: Higher beef prices drive CME live cattle to new high

(Canada Beef Inc. photo)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures reached an all-time high on Tuesday, fuelled by short-covering as wholesale beef prices trended upward, traders said.

October closed up 2.725 cents per pound to 165.775 cents, and December 1.55 cents higher at 167.85 cents (all figures US$).

Tuesday morning’s choice wholesale beef price, or cutout, climbed $2.49 per hundredweight (cwt) from Monday to $243.63. Select jumped $2.85 to $232.02, the U.S. Department of Agriculture said.

Processors charged grocers more for beef to recover lost margins and justify high-priced slaughter-ready, or cash, cattle, traders and analysts said.

Beef packer margins for Tuesday were a negative $74 per head, compared with a negative $76.90 on Monday and a negative $74.30 a week ago, according to Colorado-based analytics firm HedgersEdge.com.

Futures’ recent rally and much-improved beef cutout values backed calls for steady-to-higher cash prices this week.

Packers did not respond to feedlots in the U.S. Plains who are asking $165/cwt or better for cattle. Last week, cash cattle moved at mostly $162/cwt.

The chance that processors might bid up for cattle again this week stirred bull spreads, which consisted of traders who bought the October contract and sold deferred months.

CME feeder cattle contracts finished well into positive territory, supported by live cattle market advances and $5-$7/cwt higher prices for feeder cattle in local markets.

October closed up 1.475 cents/lb. to 241.475 cents, and November 2.15 cents higher at 242.425 cents.

Mostly lower hogs

CME lean hogs closed mostly lower on profit-taking, except October futures that drew support from its discount to the exchange’s hog index at 109.54 cents.

October hogs closed up 0.05 cent/lb. to 107.225 cents. December ended 1.525 cents lower at 94.35 cents, and February down 1.125 cents to 91.625 cents.

Investors anxiously await USDA’s afternoon hog prices given the seasonal bump in supplies and the government’s unexpected upward correction to cash prices on Monday.

USDA’s morning direct cash hog prices were unavailable. Hogs in the Midwest traded mostly steady with Monday’s sales, according to regional hog dealers.

More heavyweight hogs, and grocers wrapping up National Pork Month purchases, could consistently weigh on wholesale pork values in the near term, a trader said.

Separate USDA data showed the morning’s wholesale pork price was down $1.32/cwt from Monday to $123.13, on reduced loin and ham costs.

Back-month fund selling developed after December drifted below the 100-day moving average of 95.61 cents. February slipped beneath where the 20-day and 100-day moving averages converged at 91.63 cents, which triggered fund liquidation.

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

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