Chicago | Reuters — Chicago Mercantile Exchange live cattle futures reached a contract high on Thursday amid hopes that Chinese importers will buy more U.S. beef after rival supplier Brazil suspended shipments to China, analysts said.
Brazil said it would halt beef exports to China, the main destination for its overseas shipments, after confirming a case of BSE.
Brazilian Agriculture Minister Carlos Favaro vowed to treat the case with the utmost transparency, adding he hopes the suspension can be lifted next month. In 2021, Brazil suspended exports to China for more than three months after finding two cases of the disease.
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“Using history as a guide, the U.S. is going to be looking at extra beef exports to China for the next three months and potentially longer if more cases pop up,” said Jim Gerlach, president of broker A/C Trading in Indiana.
The U.S. does not plan to restrict imports of Brazilian beef, the U.S. Department of Agriculture said in an email.
Thinly traded February live cattle futures settled up 0.25 cent at 165.15 cents/lb. after reaching 165.65 cents, the highest on a continuous chart of the front contract since January 2015 (all figures US$).
Most-active April live cattle finished up 0.25 cent at 165.325 cents/lb. and set a contract high of 166.1 cents.
A reduction in the U.S. cattle herd has already boosted futures, as ranchers have grappled with drought. USDA, at its annual Agricultural Outlook Forum, projected the five-area steer price in 2023 will average a record $159/cwt, about $15/cwt above 2022’s average price.
CME March feeder cattle futures settled up 1.25 cents at 189.225 cents/lb. and reached its highest price since September 2022, supported by weak corn futures that signaled cheaper feed costs.
In the pig market, CME April lean hogs settled down 0.35 cent at 86.2 cents/lb. while June hogs ended up 0.15 cent at 103.95 cents.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
