Chicago | Reuters — Chicago Mercantile Exchange (CME) feeder cattle futures firmed on Wednesday, seeing a boost from weakness in the grain market and as the trade tried to spur ranchers to rebuild their herds, analysts said.
Live cattle futures eased on profit-taking and weaker-than-expected cash trades, traders said.
The cattle slaughter rate was just 100,000 head on Tuesday, as a winter storm system moved through the Northern Plains, though those numbers increased on Wednesday, analysts said.
While the Northern Plains and upper Mississippi Valley will see an end to freezing rain on Wednesday, the National Weather Service said falling temperatures are following blizzard conditions.
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Packer margins firmed for both beef and pork processing on Wednesday, according to Hedgersedge.com. Both select and choice cut boxed beef prices fell Wednesday afternoon, the U.S. Department of Agriculture reported.
Meanwhile, CME lean hog futures were mixed, as the spread between the February LHG24 and June LHM24 lean hog contracts is unusually wide, said Don Norcini, an independent livestock trader.
Market participants have been adding a premium to distant month contracts, on the hopes the U.S. breeding herd would shrink because producers are struggling to make a profit amid low pig prices and high operational costs.
But the USDA reported an inventory of all hogs and pigs that was larger than traders expected, Norcini said.
“Spread traders are now thinking maybe the premium in those back months is a little too wide – and maybe that February contract is a little too cheap, what with winter weather coming and the weight loss potential,” Norcini said.
CME live cattle February contract LCG24 settled down 1.125 cents, at 169.275 cents per pound. CME’s most-active March feeder cattle FCH24 ended the day up 0.825 cent, at 225.400 cents per pound.
CME’s most-active February lean hogs LHG24 settled up 0.575 cent, at 69.875 cents per pound.