U.S. live cattle futures nearly flat; beef underpins

Chicago Mercantile Exchange (CME) live cattle futures ended nearly flat on Thursday after scaling a six-week peak on firm beef markets tied to reduced output due to a major winter storm in the U.S. Plains, traders and analysts said.

Spot February cattle expired down 0.55 cent per pound at 128 cents, while most active April was nearly unchanged, easing only 0.025 cent at 129.85 cents/lb. (all figures US$).

For the month, spot cattle were up 0.29 per cent.

Cattle futures were underpinned by hampered movement of cattle to market, reduced cattle weights and less beef output all due to blizzards that slammed into the feedlot areas of the Plains states over the past week.

"The storm is going to hamper supply movement, cattle have fundamental support," said Sterling Smith, futures specialist for Citigroup.

This week’s blizzard, which dumped up to 50 cm of wet snow accompanied by winds near 130 km/h, stressed cattle in the huge cattle feeding region of the U.S. High Plains, leading to big weight losses, cattle feeders and livestock experts said.

"Beef is up due to the storm-related reduction in supply and not to increased demand," said Dennis Smith, a broker for Archer Financial.

The U.S. Department of Agriculture on Thursday reported choice wholesale beef carcasses up 73 cents at $186.30 per hundredweight (cwt) and select up 67 cents at $185.54/cwt.

Choice beef is up $3.05/cwt since early Monday and select up $5.25.

"We’re waiting for cash cattle to trade and I have a feeling they may just be steady because the packer margins are still in the red," a trader said.

Cash cattle sources said cattle in Kansas were being bid at $124/cwt, unchanged from last week. No cash trades had been reported.

U.S. beef packer margins on Thursday were a negative $24.05 per head versus a negative $35.70 on Wednesday and a negative $50.70 a week ago, according to HedgerEdge.

Feeder cattle were higher on improved pasture prospects in the Plains that was aiding the demand for young grazing cattle.

CME March feeder cattle were up 0.55 cent at 142 cents/lb., and April up 0.55 cent at 144.925 cents. Gains in feeder cattle were slowed by higher Chicago Board of Trade corn futures.

Cattle futures have been pressured by uncertainty ahead of the Friday deadline for U.S. governmental budget cuts. The cuts could slow beef production if federal meat inspectors are furloughed.

Slow export sales of U.S. beef last week and a cancellation of beef export orders by Japan hampered gains in cattle futures. The U.S. Department of Agriculture on Thursday reported a net 3,900 tonnes of U.S. beef sales last week, nearly a one-year low.

Lean hogs firm on oversold technicals

CME lean hog futures turned firm on oversold technicals after trading lower for the third day in a row in early dealings and continued to flounder near three-month lows as cash hog markets remained weak, traders said.

Hog futures were down 7.4 per cent for the month.

Iowa, southern Minnesota and southeast Ohio cash hogs were steady while Indiana, northwest Ohio and Illinois were $1 lower on Thursday.

Packers are well-bought and supplies are tightening in the Iowa/southern Minnesota region. Cash sources in Illinois said the bottom has been reached and they expect prices to shift higher.

"Hogs are trying to bottom out, spreads are turning favourable and they’re oversold," the Archer broker said.

CME April lean hogs unchanged at 81 cents/lb. and May was up 0.1 cent at 89.3 cents.

U.S. pork packer margins on Thursday were a positive $10.50 per head versus a positive $8.15 on Wednesday and a positive 60 cents a week ago, according to HedgersEdge.

Hog futures were nearing technical oversold levels and due for a correction. Based on continuous charts, lean hogs are trading near their lowest level in three months, reaching a session low of $80.775.

The CME lean hog index for the two days ended Feb. 25 was at $81.40, and for the two days ended Feb. 22, it was $82.63.

— Sam Nelson is a Reuters correspondent covering agricultural futures markets in Chicago. Additional reporting for Reuters by Alyce Hinton in Chicago.

About the author


Glacier FarmMedia Feed

Glacier FarmMedia, a division of Glacier Media, is Canada's largest publisher of agricultural news in print and online.

GFM Network News's recent articles


Stories from our other publications