U.S. livestock: CME cattle futures up on beef prices, demand

June hogs down off recent rallies

(Lovelyshot/iStock/Getty Images)

Chicago | Reuters — Chicago Mercantile Exchange cattle futures rose on Friday on strong beef prices and demand for red meat that also catapulted margins for beef processors.

Meat demand is high as federal stimulus checks have increased incomes and prompted consumers to spend more at supermarkets and restaurants, analysts said. COVID-19 vaccinations are also prompting people to eat out more, they said.

Prices for select cuts of beef shipped to wholesale buyers in large boxes increased by 91 cents, to $209.27/cwt, according to the U.S. Department of Agriculture (all figures US$). Prices for choice cuts eased by 49 cents, to $305.88/cwt, after climbing recently.

“People want to pay up for steaks,” said Ted Seifried, chief ag market strategist at The Zaner Ag Hedge Group. “People want beef.”

CME June live cattle futures ended up 0.55 cent at 116.025 cents/lb. and touched their highest price since April 21. The contract recovered slightly after sliding 10 per cent from April 8 to May 4.

August feeder cattle futures finished 0.875 cent higher at 144.275 cents/lb. It also suffered a 10 per cent slide over the past month.

With demand strong, margins for beef packers reached $732.80 per head, up from $651.10 a week ago, according to livestock marketing advisory service HedgersEdge.com.

Feedlot operators are angry they are missing out on such huge profits, brokers said, as feeders’ margins are being hurt by soaring costs for grains used for feed.

“A big problem in the market is the packers have too big a margin,” said Don Roose, president of Iowa-based commodities brokerage U.S. Commodities.

Starting June 1, CME will raise the daily trading limit for feeder cattle futures to 6.25 cents per pound from five cents, according to the exchange. The live cattle limit will increase to five cents from four cents.

In the pork market, CME most-active June lean hogs fell 1.625 cents to 112.85 cents/lb. in a retreat from recent rallies.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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