Cattle futures at the Chicago Mercantile Exchange set a new 16-month high March 9 in the active April contract on a mix of technical and fundamental factors.
Cash beef prices are the highest in nearly 10 months due to less production and improving demand.
Investors also are buying cattle futures amid concerns rain and melting snow will keep feedlots in the central and southern U. S. Plains muddy. Such conditions may continue to stress cattle and slow weight gains. As a result, more cattle will have to be slaughtered to produce the same amount of beef.
“The beef market has been able to hold around this $150 (per cwt) area, so we still have demand at the same time that our (cattle) performance has been poor,” said Don Roose, president of U. S. Commodities Inc.
USDA on Tuesday put the wholesale choice boxed beef price up 21 cents at $149.50 per cwt and select cutout up 91 cents at $149.02.
“I think with the wet weather conditions that we have in front of us across the Midwest and in some of the cattle belt areas, the feeling is that we could have some additional mud problems. It’s a continuation of what has happened since December,” Roose said.
Short-covering and bull spreading added to support in cattle futures and offset index fund rolling of long April positions into June.
Strong technicals, the CME Feeder Cattle index at a 17-month high, and firm cash feeder prices supported feeder cattle futures early before profit-taking developed to end most contracts a little lower. The profit-taking emerged after all but March pos ted cont ract highs on March 8.