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U.S. livestock: CME live cattle sag as funds roll positions

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday drew pressure from funds that sold, or “rolled,” June positions into back months before similar moves lasting five days beginning on Monday, said traders.

Continued uneasiness about burdensome supplies ahead further deterred futures buyers, they said.

There may be some concern about a “tsunami of cattle,” said CHS Hedging analyst Steve Wagner. But reduced cattle weights suggest feedlots are marketing cattle earlier than planned, which could mitigate larger supplies possibly around June or July, he said.

June live cattle closed 0.475 cent/lb. lower at 106.05 (all figures US$). August ended down 0.45 cent at 105.075 cents.

This week packers paid $123-$128/cwt for market-ready, or cash, cattle that a week ago brought $118-$126.50 last week.

Much-improved wholesale beef demand and historically high packer profits were incentives for processors to compete for cattle, said traders and analysts.

Investors look ahead to next week’s cash cattle trade against the backdrop of tight near-term supplies and ramped up retail meat purchases in preparation for the U.S. Memorial Day holiday grilling demand.

On Friday, the U.S. Department of Agriculture’s (USDA) monthly meat export data showed March U.S. beef exports totaled 260.6 million lbs., up 15.4 per cent from February and up 11.4 per cent from a year ago.

Weaker CME live cattle futures undercut the exchange’s feeder cattle contract.

May closed 0.4 cents/lb. lower at 140.4 cents.

Hogs close steady/mixed

CME lean hog futures finished flat to mixed, with support from firmer cash and wholesale pork prices, said traders.

But futures’ premiums to the exchange’s hog index for May 2 at 62.93 cents, and pork demand uncertainty through the rest of this year, pressured some contracts, they said.

May closed unchanged at 67.075 cents/lb. Most actively traded June ended up 0.025 cent at 73.525 cents, and July closed down 0.1 cent at 75.575.

Some packers raised bids for hogs for next week’s production, while others competed less for supplies to preserve their margins, said analysts and traders.

Grocers may be buying pork and chicken as price-competitive options to beef.

“Wholesale beef prices continue to move higher making pork the better alternative,” said Wagner.

Friday’s USDA export data put March’s pork total at 538.1 million lbs., up 9.6 per cent from the prior month and up 2.7 per cent from a year earlier.

— Reporting for Reuters by Theopolis Waters in Chicago.

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