U.S. cattle and hog futures closed sharply higher last Friday, with the April cattle contract at the highest ever for a lead contract.
As of last Friday both markets had fully recovered the losses incurred shortly after Japan’s March 11 earthquake.
In cattle, higher cash sales last week in Nebraska, the No. 2 cattle state behind Texas, at $190 per cwt on a carcass basis triggered buying in futures. As the futures rose short covering and chart-based buy orders were activated.
“If you were short, would you be happy right now?” said one cattle trader explaining the rush by some traders to buy back short positions.
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Since the Japanese earthquake, wholesale beef prices rose to their highest since 2003, cash cattle traded higher from Texas to Nebraska, and Japan was back in the market buying U.S. beef.
Also, Japan may need to buy more beef to replace meat that was either spoiled due to power outages or contaminated by the radiation leaks, said Dan Norcini, independent livestock trader.
USDA last Thursday reported Japan bought 3,900 tonnes of U.S. beef last week, the largest sale to any country that week.
While beef demand is strong, the supply may decline, which could force cattle prices even higher, traders said. The U.S. cattle herd is the smallest in more than 50 years and feedlot cattle numbers are expected to decrease in the months ahead.
