Chicago Mercantile Exchange (CME) live cattle futures on Monday turned higher on short-covering after Friday’s bullish U.S. Department of Agriculture monthly cattle-on-feed report, analysts and traders said.
Friday’s data showed a bigger-than-expected drop in the number of cattle placed in feedlots in February as corn remained at historically-high levels.
“The cattle report was good news. But we still have to deal with the reality that snow and cold weather are putting grilling on hold and pressuring the cutout,” a trader said.
The government’s wholesale meat price data, or cutout, showed choice beef on Monday at $190.58 per hundredweight (cwt), down 85 cents from Friday; select cuts tumbled $2.07 to $190.21 (all figures US$).
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Investors are waiting for feedyards to count the number of available cattle for sale. Packers are buying supplies for next week, the first full slaughter week after the Good Friday holiday on March 29 which may support cash cattle prices.
Last week, cattle in the cash market traded at $124 to $125/cwt, compared with $126 to $127 a week earlier, said feedlot sources.
Wintry weather last weekend dumped more than a foot of snow on parts of the Midwest, disrupting livestock production in the region.
Packers on Monday processed 106,000 head of cattle, down 13,000 from a week ago and 17,000 less than a year earlier, according to USDA.
April live cattle closed up 0.25 cent per pound to 126.45 cents. June was 0.3 cent higher at 121.475 cents.
CME March feeder cattle gained, guided by its modest discount to CME’s feeder cattle index at 135.06 cents. Remaining months followed the higher live cattle market.
Spot March feeder cattle, which will expire on Thursday, settled up 0.075 cent/lb. to 134.725 cents. Most-actively traded April ended at 138.4 cents, 0.35 cent higher.
Hogs jump on cash expectations
Higher cash hog price expectations spawned short-covering, pushing up CME hog futures, traders and analysts said.
The average hog price in Iowa/Minnesota on Monday was $73.41/cwt, up $2.81 from Friday, according to USDA.
Packers will need hogs for next week’s post-holiday slaughter, a trader said.
Most meat packing plants will be closed on Good Friday but only a small number will be dark the day after Easter, he said.
Spreaders bought deferred contracts in anticipation of tighter hog supplies ahead.
Traders expect fewer hogs in late spring and early summer. Last summer’s drought in the U.S. Plains sent feed costs to record highs, which forced producers to aggressively liquidate their sow herds.
“We may see tight (hog) supplies sometime in June and July. The hogs that we’re processing now were born before the corn price shock hit,” said Linn Group analyst John Ginzel.
Spot April hogs closed at 78.475 cents/lb., up 0.425 cent. Most-actively traded June was 1.05 cent higher to 90.775 cents.
— Theopolis Waters writes for Reuters from Chicago.
