U.S. livestock: CME feeder, live cattle end higher on tight supplies

Chicago | Reuters — Cheaper grain prices, firmer live cattle prices coupled with tight supplies and good pasture boosted Chicago Mercantile Exchange feeder cattle values into record territory on Thursday, traders said.

CME August feeders ended at 199.825 cents per pound, up 1.05 cents, while the September contract closed up 0.75 cent at 200.25 cents/lb. (all figures US$). The October contract also ended up 0.6 cent at 200.525 cents/lb.

“Trading at $2/lb. is a milestone number, it’s the highest it’s ever been,” said Sterling Smith, futures specialist at Citigroup.

“Given the current situation with live cattle, cheap corn and plentiful DDGs (distillers dried grains), demand for feeder cattle is quite high,” Smith said.

CME live cattle traded more than one per cent higher on Thursday boosted by tight supplies and expectations of higher cash trade, traders said.

Bids for cattle in the cash market were renewed at $142 in Texas and Kansas, but no trade was established, a feedlot source said. Last week, cash cattle traded at $143 in the U.S. Plains.

USDA data showed a light volume of cash cattle traded at $143 per hundredweight (cwt) late on Wednesday in Nebraska, pointing to possible higher cash trade in other U.S. Plains states, traders said.

Lighter slaughter volume also lent additional support to live cattle futures, traders said.

“Cattle supplies are tight and slaughter pace is about seven per cent behind last year at the same time,” said Domenic Varricchio, commodities broker at Schwieterman, Inc.

USDA estimated week-to-date cattle slaughter at 464,000 head, 36,000 head less than in the same period last year.

Thursday morning’s wholesale choice beef price slipped nine cents per hundredweight from Wednesday to $232.02. Select cuts fell 79 cents to $223.07, according to U.S. Department of Agriculture data.

June, which expires at the end of the month, ended at 139.5 cents, up 1.5 cent. August closed at 141.325 cents, up 1.15 cent.

Chicago Mercantile Exchange lean hog contracts also closed higher on Thursday, as firm cash prices combined with the movement of pork products supported futures, traders said.

The U.S. Department of Agriculture data showed the national average weighted hog prices at $109.54/cwt on Thursday, $1.83 higher than the previous day.

June hogs, which expires mid-month, ended up 0.425 cent/lb. at 112.975 cents. July closed up 0.675 cents at 121.175.

— Meredith Davis reports on ag commodity futures for Reuters from Chicago.

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