Chicago | Reuters — Chicago Mercantile Exchange live cattle futures leapt to a five-month high on Wednesday and feeder cattle futures neared a six-month peak as boxed beef prices continued to rise.
Meatpackers are paying more for cattle due to the strength of the beef market, traders said. Prices typically rise heading into Labour Day, a major holiday for grilling.
Profit margins for beef processors increased to $246.65 per head of cattle from $240.65 on Tuesday, according to Denver-based livestock marketing advisory service HedgersEdge.com (all figures US$).
Prices for choice cuts of boxed beef rose by 56 cents, to $208.64/cwt, while select cuts increased by $1.62, to $196.65/cwt, according to the U.S. Department of Agriculture.
“As long as we can keep boxed beef demand up and maintain those packer margins, I think there’s going to be decent support,” said Matt Wiegand, commodity broker for FuturesOne.
CME October live cattle rose 1.275 cents to settle at 109.575 cents/lb. and set its highest price since March 4. September feeder cattle jumped 1.325 cents to 147.95 cents/lb. and reached its highest price since Feb. 24.
The coronavirus pandemic prompted consumers to hoard meat this spring while meatpackers such as JBS USA and Tyson Foods temporarily shut slaughterhouses to contain outbreaks among workers. The plant closures in April pushed down prices for cattle.
Negotiated cash prices for cattle this week have increased by about $4/cwt from last week in southern states, traders said.
“The uptrend in cash is keeping us underpinned,” Wiegand said.
In the pork market, CME October lean hogs settled 0.225 cent lower at 51.6 cents/lb.
Traders on Thursday will check weekly U.S. export sales data to assess demand from China, the world’s biggest pork consumer.
USDA, in a monthly report on Wednesday, cut its pork production forecast due to lighter carcass weights and a slower expected slaughter pace in the third quarter.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.