Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures ended higher on Tuesday as wholesale beef prices rose, bucking seasonal trends and spurring hopes for higher cash cattle prices this week, traders said.
CME August live cattle futures settled up 0.1 cent at 135.725 cents/lb. and most-active October ended up 0.5 cent at 141.1 cents (all figures US$). In the feeder cattle market, August feeders rose 2.075 cents to finish at 178.75 cents/lb., benefiting from a drop in corn futures.
Wholesale prices for choice cuts of beef hit their highest level since April, defying the normal seasonal tendency for demand to slow in mid-summer. Choice cuts of boxed beef rose by $2.02 on Tuesday to $272.57 per hundredweight, according to the U.S. Department of Agriculture (USDA), and select cuts were up $1.07 at $243.73/cwt.
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“The (beef) cutout values are higher here, so it has everybody thinking we are going to see strengthening in the cash (cattle) markets,” said Brian Hoops, president of Midwest Market Solutions.
Traders were positioning ahead of Friday’s monthly USDA Cattle on Feed report. Analysts surveyed by Reuters on average expect the government to report the number of cattle placed in feedlots during June at 1.586 million head, down five per cent from a year earlier.
However, analysts on average put the total number of U.S. cattle on feed as of June 1 at 11.301 million head, 100.1 per cent of a year ago. June marketings were seen at 101.9 per cent of a year ago.
Scorching temperatures in the southern Plains this week are prompting some producers to move cattle from parched grazing pastures into feedlots or slaughterhouses, Hoops said. USDA will report on July feedlot placements in its Aug. 19 report.
Nearby CME hog futures closed modestly higher, supported by firm cash hog markets and rising wholesale pork prices.
USDA quoted the U.S. pork carcass cutout value at $125.12/cwt on Tuesday afternoon, the highest since mid-August of last year.
August lean hogs settled up 0.7 cent at 112.825 cents/lb. and October hogs ended up 0.125 cent at 94.5 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
