Chicago | Reuters — Front-month live cattle futures on the Chicago Mercantile Exchange reached a near eight-year high on Wednesday, supported by tightening U.S. cattle supplies and rising wholesale beef prices, while the most actively traded contracts drifted lower as market players awaited more direction from cash cattle markets.
CME’s spot February live cattle futures contract settled up 0.4 cent at 162.55 cents/lb. after climbing to 162.8 cents, the highest on a continuous chart of the front contract since April 2015 (all figures US$). But the benchmark April contract finished down 0.075 cent at 164.6 cents/lb.
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“The bullish fundamentals in cattle are as good as I have ever seen,” said Dan Norcini, an independent livestock trader, citing a shrinking U.S. cattle herd and strong cash prices paid in recent weeks for market-ready cattle.
“But that doesn’t impress the Board because (traders) need to see the cash market. If the cash isn’t trading, people are afraid to get in there and buy,” Norcini said. Last week, cash market activity picked up late on Friday, and some traders expected another late start this week.
CME March feeder cattle futures ended up 0.675 cent at 187.325 cents/lb., supported by declines in corn futures that signaled cheaper feed costs.
Meanwhile, wholesale beef prices firmed. Choice cuts were up $3.61 for the day at $275.67 per hundredweight (cwt), according to U.S. Department of Agriculture data, the highest since Jan. 17. Select cuts rose $2.41 at $261.19.
CME hog futures closed lower with the bellwether April contract losing ground to back months, reversing the trend of the previous two days. April hogs settled Wednesday down 0.75 cent at 86.5 cents/lb., and June hogs fell 0.525 cent to end at 104.3 cents.
The CME Lean Hog Index, a two-day weighted average of cash hog prices, rose by 54 cents to $75.18.
USDA priced pork carcasses at $80.94/cwt Wednesday afternoon, down 94 cents from Tuesday.
Traders await USDA’s weekly export sales report on Thursday for a reading of export demand for U.S. pork and beef.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
