Chicago | Reuters — Chicago Mercantile Exchange live cattle futures strengthened on Thursday, with the front-month contract setting a new high, as cash prices climbed.
Cash cattle trades of around $170-$171/cwt in western Nebraska and around $172/cwt in northwest Iowa ignited the rally in futures, analysts said (all figures US$).
Cash prices were up about $5 from last week, said Don Roose, president of brokerage U.S. Commodities.
The cash trade represented new highs for 2023, Cassie Fish, an analyst and beef industry expert, said on The Beef blog.
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“This week’s trade is blowing the roof off as packers scramble to cover slaughter needs amid tight market-ready fed cattle supplies,” Fish said.
Supplies have tightened as producers have reduced their herds due to drought and high feed costs, raising costs for beef processors.
Meatpackers slaughtered an estimated 126,000 cattle, up from 124,000 cattle a week ago and 120,000 cattle a year earlier, the U.S. Department of Agriculture (USDA) said.
Estimated margins for processors dropped to $47.65 per head of cattle from $52.45 on Wednesday and $67.85 a week ago, according to HedgersEdge.com LLC.
CME April live cattle settled up 1.725 cents at 167.55 cents/lb. and reached a contract high of 167.65 cents. June cattle jumped 1.35 cents. to 161 cents/lb.
Feeder cattle also finished higher, with the April contract rising 1.7 cents, to 199.9 cents/lb.
In the CME hog market, front-month April futures eased 0.325 cent to 76.45 cents/lb. June hogs rose 0.775 cent to 91.6 cents/lb.
USDA, in a quarterly report, said the U.S. hog herd totaled 72.9 million head on March 1, up 0.2 per cent from a year ago and in line with analysts’ expectations.
Hog producers intend to have 2.97 million sows farrow from June to August, down three per cent from a year earlier, USDA said. Analysts estimated farrowing intentions would rise 0.1 per cent for that period.
The farrowing intentions look supportive for futures, Roose said.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
