Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Tuesday, following stronger-than-expected cash prices as wintry weather takes aim at the southern U.S. Plains, traders said.
Spot December ended 2.2 cents/lb. higher at 125.6 cents, and February was 1.775 cents higher at 131.8 cents (all figures US$).
On Tuesday, a small number of market-ready (cash) cattle traded in Kansas at $122/cwt, up from mostly $117-$118 last week, according to feedlot sources.
They said packers in Texas paid $124, $6 more than a week earlier.
Packing plants will be closed at least four days each week during the Christmas and New Year’s holidays, thereby minimizing the number of cattle they need for that period.
But some processors spent more for supplies to ensure they had cattle ahead of forecasts for a winter storm to enter parts of Texas, Oklahoma and Kansas by the weekend.
Inclement weather typically slows down animal weight gains and snarls transportation of livestock to processors.
Record amounts of pork and chicken have stymied wholesale beef demand, but potential weather disruptions and holiday plant closings could send grocers scrambling to buy product, said analysts and traders.
Tuesday morning’s wholesale choice beef price dropped 58 cents/cwt from Monday, to $190.70. Select cuts fell $1.84, to $182.09, based on U.S. Department of Agriculture data.
The USDA will issue the monthly cold storage survey on Tuesday at 2 p.m. CT, which will include November beef and pork inventories.
A few analysts, on average, estimated last month’s cold storage total beef stocks at 534.6 million lbs., and pork at 577.5 million.
Lower corn prices and higher live cattle futures sent CME feeder cattle up sharply. January ended up 3.15 cents/lb. to 158.65 cents.
Hog futures up with cattle
Strong live cattle contracts lifted CME lean hogs, despite weak cash and wholesale pork values amid plentiful supplies, traders said.
Spot February closed 0.4 cent/lb. higher at 56.85 cents, and April was 0.8 cent higher, at 62.8 cents.
USDA data showed Tuesday morning’s average cash hog price in Iowa/Minnesota at $49.29/cwt, 66 cents lower than on Monday.
The morning’s wholesale pork price dropped 39 cents/cwt from Monday, to $71.42, the USDA said.
Some investors adjusted positions ahead of the government’s quarterly hog report on Wednesday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.