Chicago | Reuters — U.S. feeder cattle futures dropped on Wednesday, reacting to limit-up gains in corn and soybean futures that will translate to higher livestock feed costs as grain users compete for tight supplies, traders said.
On the Chicago Mercantile Exchange, the most-active May feeder cattle contract finished 2.8 cents lower at 149.4 cents (all figures US$).
“Corn was limit-up. Cattle were up a little bit, but not enough to allow you to pay that much for the feeders, so they took it out of the feeders,” said Alan Brugler, president of Brugler Marketing.
Gains in live cattle were driven by consumer demand for beef, as boxed beef prices climb and cash trade strengthens.
Benchmark CME June live cattle futures ended 0.675 cent higher at 122.9 cents/lb., gaining seven of the last eight sessions.
Market-ready cattle traded in the Plains cash markets last week at around $115-$116/cwt, up $1 from the previous week, and reached $118 this week, traders said.
Choice cuts of boxed beef were up $2.29 at $247.12/cwt, according to USDA. Select cuts added $2.21, to $238.13/cwt.
Daily cattle slaughter fluctuated, as 119,000 head were processed Wednesday, down 3,000 from the same day a week ago, USDA said.
Meanwhile, lean hog futures slipped, pressured by limit-up soybean meal, though the market remains near recent highs on tight supplies due to increased consumption and a smaller herd size.
CME’s most-active June lean hog futures settled down 0.725 cent at 105.3 cents/lb.
“I think these (prices) are justified by that combination of strong export demand, tighter hog numbers and tight storage stocks,” Brugler said.
The CME’s lean hog index, a two-day weighted average of cash hog prices, climbed to $98.04/cwt, its highest since October 2014.
Daily hog slaughter remains strong, with 6,000 more hogs processed Wednesday than the same time a week prior and 16,000 more than the same day a year ago, according to USDA.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.