U.S. livestock: Cash price record lifts CME live cattle to new high

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures touched a new high on Thursday in response to record-high prices for market-ready, or cash, cattle, traders said.

Cash cattle in Texas and Kansas fetched $170 per hundredweight (cwt), up $6 from last week, and surpassed an all-time high of $166 set in parts of the U.S. Plains in July (all figures US$).

Futures’ recent rally and tight supplies forced packers to bid up for cattle despite their unprofitable margins and the morning’s pullback in wholesale beef prices, traders said.

Thursday morning’s choice wholesale beef price sagged 66 cents/cwt from Wednesday to $250.34. Select dropped 49 cents to $234.58, according to the U.S. Department of Agriculture (USDA).

Beef packer margins for Thursday were negative $56.20 per head, compared with negative $64.70 on Wednesday and negative $54.90 a week earlier, according to Colorado-based analytics firm HedgersEdge.com.

Investors periodically adjusted positions ahead of the government’s monthly Cattle-On-Feed report on Friday.

Most analysts expect Friday’s report to show placements of cattle in U.S. feedlots increased in September compared with a year ago.

CME Group will reduce electronic trading hours for its livestock markets effective Monday (Oct. 27). [Related story]

October and December closed up one cent per pound at 169.05 cents and 169.1 cents, respectively.

Live cattle market gains and fund buying drove up CME feeder cattle futures.

October closed up 0.775 cent to 240.225 cents/lb., and November 1.525 cents higher at 236.7 cents.

Hogs settle lower

CME lean hogs settled lower on expectations that cash prices would maintain their 10-day slide as supplies grow seasonally, traders said.

December finished 1.025 cent lower at 88.725 cents/lb., and February down 0.4 cent to 87.45 cents.

The morning’s average hog price in the western Midwest region slumped $3.20/cwt from Wednesday to $88.98, said USDA.

“In the short term, there are plenty of hogs and product has come under pressure. But we’ve priced in a lot of the bad news already,” said Tom Cawthorne, a trader with AgFutures Managed Investments.

Producers are moving hogs ahead of schedule to beat lower prices, which could result in a temporary gap in supplies later, another trader said.

The cutout may receive help from winter seasonal ham demand and shoppers possibly shifting from high-priced beef to relatively low-cost pork, he said.

U.S. government data showed Thursday morning’s wholesale pork price, or cutout, up 69 cents/cwt from Wednesday to $101.85.

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