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U.S. livestock: CME live cattle surge on beef demand, cash price hopes

(Canada Beef Inc. photo)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished higher on Tuesday, driven by strong wholesale beef values that generated cash price optimism for this week, said traders.

Investors bought deferred months and simultaneously sold December futures before its Dec. 29 expiration. Fund buying contributed to market advances.

December live cattle finished up 1.675 cents/lb. at 121.5 cents (all figures US$). Most actively traded February ended 2.9 cents higher at 121.475 cents after topping the 20-day moving average of 120.619 cents.

The morning’s choice wholesale beef price jumped $3.07/cwt to $202.63 from Friday. Select cuts surged $3.15, to $191.03, the U.S. Department of Agriculture (USDA) said.

Last week slaughter-ready, or cash, cattle in the U.S. Plains brought $119-$120/cwt versus $118-$120 a week earlier.

Steady-to-firmer cash prices in recent weeks suggest some packers are short on inventory, said analysts and traders.

They said grocers may be buying beef to avoid potential shortages due to Christmas and New Year’s plant closures. Some consumers seem ready for beef as an alternative to turkey and ham after the Thanksgiving and Christmas holidays, they added.

“We’re in a better place than what I think some of the trade and some of the traders had plugged in,” said West Oak Commodities analyst Tom Tippens.

CME feeder cattle posted their biggest one-day increase since mid July, primarily on short-covering and live cattle future’s turnaround.

January feeder cattle closed 2.85 cents/lb. higher at 144.4 cents.

Hog futures extend gains

CME lean hogs landed in positive territory for a fourth straight session in which investors bought nearby contracts and sold deferred months, said traders.

Last Friday’s higher cash prices contributed to Tuesday’s gains. But cash prices retreated on Tuesday after some processors filled inventories before shutting down plants at least one day for the New Year’s holiday.

February closed 1.55 cents higher at 71.525 cents, and April finished up 0.6 cent, to 75.375 cents.

“People evening up positions before the end of the year may have had something to do with today’s futures gains. But part of it too was Friday’s bullish cold storage number for pork,” a trader said.

Last Friday’s USDA monthly cold storage report put total November pork stocks at 505 million lbs., down 16 per cent from the previous month.

Analysts viewed the November storage withdrawal as an indication of brisk pork demand despite record hog production.

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

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