Chicago | Reuters — U.S. live cattle futures closed higher on Monday as support from strong wholesale beef prices and expectations of firm cash cattle prices overshadowed pressure from bearish data in a monthly cattle report released late Friday, traders said.
Chicago Mercantile Exchange April live cattle futures settled up 0.425 cent at 122.95 cents/lb. (all figures US$).
Boxed beef cutout values continue to strengthen, with choice cuts up $3.91 at $226.73/cwt on Monday afternoon and select cuts up $2.87 at $216.21, according to the U.S. Department of Agriculture (USDA).
Packer margins for cattle are hovering around $300 per head, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC, fueling expectations of strong cash trade this week after market-ready cattle traded at around $109-$110/cwt last week.
“The packer continues to make good margins and beef continues to move aggressively,” said Don Roose, president of Iowa-based U.S. Commodities.
USDA late on Friday reported U.S. cattle feedlot placements for December at 101 per cent of a year ago, above an average of analyst expectations for 97 per cent.
The larger-than-expected figure pressured cattle futures in early moves, but traders soon shifted their focus to rising beef prices.
USDA’s Cattle on Feed report “pushed us down early. But it’s a look backwards, almost a month old, so we didn’t pay as much attention to it,” Roose said.
However, CME March feeder cattle futures ended modestly lower on Monday, finishing down 0.3 cent at 143.85 cents/lb. as corn futures rallied, signaling higher feed costs.
CME lean hog futures edged higher, with the benchmark April contract settling up 0.475 cent at 76.625 cents/lb. The spot February contract rose 0.7 cent, to 70.625 cents/lb.
A winter storm crossing the Midwest on Monday lent support, threatening to slow the movement of animals.
After Monday’s close, USDA’s monthly cold storage report showed U.S. Dec. 31 frozen beef stocks at 534.297 million pounds, up 11 per cent from a year ago, and frozen pork belly stocks at 30.715 million pounds, down 54 per cent from this time last year.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.