Chicago Mercantile Exchange live cattle futures hit a six-month high on Tuesday in anticipation of higher cash prices this week, traders and analysts said.
There were no cash cattle bids or asking prices reported by feedlot sources as of Tuesday.
Last week, cash cattle in Texas and Kansas moved at $121 per hundredweight (cwt), feedlot sources said. They said live-basis cattle in Nebraska traded at $123.50 (all figures US$).
Processors may be convinced to spend more for cattle, traders said, because fewer cattle are up for sale and since U.S. grocers are stocking up on beef ahead of Labour Day holiday outdoor cookouts.
The U.S. Department of Agriculture on Tuesday afternoon quoted the wholesale price, or cutout, of choice beef at $190.32/cwt, up four cents from Monday. Select cuts rose 45 cents to $183.30.
Speculative futures traders bought deferred contracts with the view that cash cattle and beef values have forged a summer seasonal low.
Spread traders bought October CME live cattle futures and sold the August contract that will expire on Aug. 30.
August live cattle futures closed up 0.3 cent at 123.9 cents per pound and October settled at 128.075 cents, 0.675 cent higher.
The drop in corn prices and firm live cattle futures pushed up CME feeder cattle.
Traders also cited $3 to $5/cwt higher prices for cash feeder cattle in the closely watched Oklahoma City market.
August feeders closed at 153.85 cents, up 0.35 cent/lb., while September closed at 157.7 cents, 0.7 cent higher.
Hogs up with cash
CME hog futures rose for a third day in a row, fuelled by higher cash hog and wholesale pork values, analysts and traders said.
The average hog price Tuesday afternoon at the closely watched Iowa/Minnesota market was at $99.75/cwt, $1.26 higher than on Monday, according to USDA.
Government data reported the wholesale pork, or cutout, price on Tuesday afternoon at $104.31/cwt, up 38 cents from Monday. The cutout was largely supported by grocer demand for ribs that are a grilling staple.
Some processors hiked cash hog bids to secure supplies for the rest of this week’s production.
Nearby hog futures’ discount to CME’s hog index, which was at 102.16 cents, encouraged buyers.
Spot August hogs closed at 101.8 cents/lb., or up 0.4 cent. Most-actively traded October ended at 86.525 cents, up 0.325 cent.
— Theopolis Waters reports for Reuters from Chicago.