Chicago Mercantile Exchange live cattle on Monday climbed to a seven-month high, supported by firm wholesale beef values, traders and analysts said.
Friday’s higher-than-expected cash cattle prices motivated futures buyers on Monday. And speculators bought deferred trading months in anticipation of tighter cattle numbers in the months ahead.
Thousands of cattle lost to the freak blizzard that hit South Dakota a week ago could further squeeze supplies this spring, traders said.
Live cattle October closed 0.65 cent per pound higher at 129.45 cents, its highest level in seven months. December finished up 0.675 cent to 133.15 cents, an eight-month high (all figures US$).
Last Friday, the bulk of cash cattle in Texas and Kansas sold for $128 per hundredweight (cwt), up $2 from the previous week, feedlot sources said.
They said live-basis cattle in Nebraska a week ago fetched $127.50-$129/cwt, compared with mainly $126 the week before.
Packers competed for cattle that are in short supply. Cattle became scarce after multi-year droughts in the U.S. shot feed costs to record highs, which at that time forced ranchers to downsize their herds.
Investors expect the firm cash price trend to continue this week based on futures’ advances and possible increased beef demand.
Data supplied by analytical market-research firm Urner Barry showed the Monday morning wholesale choice beef price, or cutout, at $192.44/cwt, up 55 cent from Friday. Select cuts rose 37 cents to $178.12.
Packers on Monday processed 121,000 head of cattle, down 3,000 head from last year for the same period, according to Urner Barry.
CME feeder cattle finished mixed, pressured by profit-taking while drawing support from the higher live cattle market.
October feeder cattle ended down 0.1 cent/lb., to 167.375 cents.
November settled at 169.4 cents, up 0.125 cent. It earlier made a new contract high of 169.95 cents in electronic trading.
Hogs end flat to weak
CME hog futures closed flat to weak. The October contract finished its lead-month tenure quietly, given its revamped price plan during the partial U.S. government shutdown.
Spot October settled unchanged at 90.75 cents after it expired at noon CT.
“It appears that traders got it right,” said Allendale chief strategist Rich Nelson.
He said the October settlement near 91 cents is almost in line with what typically happens historically during the first two weeks in October.
Some traders expected spot October futures to fluctuate widely heading into its expiration. The spot month’s settlement was tied to average volume rather than on cash prices that are unavailable due to the partial federal government shutdown.
CME Group last week said it will step up lean hog futures surveillance this week to prevent price manipulation under a pricing formula the exchange adopted to cope with the federal government shutdown.
Remaining nearby hog trading months ended weak in anticipation of increased near-term supplies that could weigh on cash hog prices. And investors waited for the spot October contract to expire before plotting their next move.
Urner Barry estimated that packers processed 431,000 hogs on Monday, up 2,000 from a week ago.
December hogs, the new lead contract, closed down 0.15 cent at 86.35 cents and February ended 0.25 cent lower at 88.65 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.