LIVESTOCK – U.S. live cattle firm on positive packer profits

* High beef prices underpinning cattle futures
    * Feeder cattle slip as CBOT corn soars
    * Most hog futures firm on higher cash hogs

    By Sam Nelson
    CHICAGO, May 13 (Reuters) - Chicago Mercantile Exchange
(CME) live cattle futures closed firm on Monday as the wholesale
beef market remained near record highs and on improving profits
for the nation's beef packers, traders and analysts said.
    Feeder cattle futures eased on a strong rally in Chicago
Board of Trade corn futures and most lean hog contracts
gained amid stubbornly strong cash hog markets.
    Cattle futures traded very strong early in the day, turned
down near midday on profit-taking and local day-trade activity, but ended the session firm. "The focus is on changing packer margins which are up and that's a big change," said Dennis Smith, a broker for Archer Financial. The estimated margins for U.S. beef packing companies on Monday were $42.00 per head in the black, up from $36.25 on Friday and above $3.90 a week ago, according to Denver-based livestock marketing advisory service LLC. "The better margins should give cattle some short-term support and the cash steer market could be higher early this week as well," Smith said. Cash cattle traded lower at $126 per live hundredweight last week and no new trades had yet been recorded this week. Choice wholesale beef carcasses on Monday traded at $204.75 per hundredweight, down 23 cents per hundredweight from late on Friday but still near the record high that was hit late last week, according to the U.S. Department of Agriculture (USDA). "Everybody is still talking about the big discount that futures hold to cash and the record high beef prices," said Jim Clarkson a broker for A&A Trading. CME June cattle closed up 0.125 cent per lb at
120.575 cents per lb and at a roughly $5.50 per hundred weight discount to the fed cattle cash traded last week. FEEDER CATTLE VOLATILE Feeder cattle futures had soared on Friday as CBOT corn tumbled following a government report showing an expected big buildup in corn supplies next season. However, feeders slid into the close on Monday as CBOT corn rebounded due to the tight old-crop supply of the main feedgrain, strong cash markets and ahead of the Tuesday expiraton of the CBOT May contract. Higher corn prices increases the cost to feed cattle and can trim demand and prices for young feeder cattle to place on feed in the nation's feedyards. CME feeder cattle for May delivery were down 0.525 cent per lb at 134.850 cents per lb and for June were down 0.425 cent per lb at 146.200. MOST HOG CONTRACTS GAIN Most lean hog contracts ended higher with the exception of thinly traded spot May which was down 0.075 cent per lb at 91.925 cents per lb. Lean hogs for June delivery were up 0.425 cent per lb at 90.925 cents per lb. "Hogs (futures) were sold down pretty hard last week so they're coming back a little from that and cash is up again today," Clarkson said.
Cash hog markets in Iowa and southern Minnesota were 50 cents per hundredweight to $1.00 higher, steady to $1.00 higher in Ohio and steady in Indiana and Illinois. Cash hog dealers said there was a tight supply in Iowa and Minnesota with some packers needing hogs but a slower demand was noted elswhere. In contrast to the cattle business, packer and processor profit margins in hogs are lacking, leading to some outlooks for a lower hog futures market soon. "It's just the opposite in hogs, packer margins are coming down so once we get past the higher cash hog markets early this week, I see it coming down," Smith said. "The seasonals say we should be coming down pretty soon." Estimated margins for U.S. pork packing companies were $6.25 per head in the red on Monday, compared to a negative $10.35 on Friday and a minus $7.90 per head profit a week ago, according to "Some say a seasonal high is in and we should be coming down, so there is a big tug of war going on in hogs and I'm not sure which way they're going," Clarkson said. (Additional reporting by Alyce Hinton in Chicago; Editing by Chizu Nomiyama)

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