Chicago Mercantile Exchange live cattle futures moved higher on Thursday as wholesale beef prices approached an all-time high, fueled by growing grilling demand, said analysts and traders.
The wholesale price of choice beef, or cutout, Thursday morning rose 81 cents per hundredweight (cwt) to $200.30/cwt (all figures US$). It is the highest since $200.65 on Oct. 20, 2003 and near the Oct. 16, 2003 record of $201.18, according to U.S. Department of Agriculture.
“I’m sure packers are loading up for grilling specials. Even if the cutout stays where it is next week, I can see futures going higher,” said Oak Investment Group president Joe Ocrant.
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Live cattle June ended at 123.650 cents, up 1.175 cents. August closed up 0.775 cent at 123.875 cents.
This week’s steady-to-higher cash cattle prices enhanced futures’ advances.
Cash cattle in Texas and Kansas moved at $128 to $129/cwt, steady to up $1 from last week, said feedlot sources. They said live-basis cattle in Nebraska fetched $130 to $131, steady to up $3.
Fewer cattle available for sale and robust wholesale beef demand caused processors to pay at least steady money for supplies, traders and analysts said.
Spot-June CME live cattle benefited from bullish spreads. The move offset funds that sold the spot month and bought deferred contracts in advance of similar moves next week by followers of the Goldman Sachs Commodity Index.
Funds that follow the Standard & Poor’s Goldman Sachs Commodity Index will shift their June long positions into August and October. The first of five days for that roll will begin on May 7.
CME feeder cattle futures closed in tandem with the higher live cattle market.
May feeder cattle closed at 140.6 cents, 1.1 cents per pound higher. And August settled up 0.925 cent at 149.65 cents.
Uneven hogs settlement
CME hogs closed mixed. Lower wholesale pork prices pressured June futures while pre-Goldman rolling by funds underpinned July, analysts and traders said.
CME June hogs settled down 0.125 cent at 92.825 cents/lb. and July closed at 93.025 cents, up 0.05 cent.
“Cash hog prices are a tossup now that the cutout and packer margins are down. Packers will probably respond by cutting kills next week and lowering cash bids,” a trader said.
Hog prices in the most-watched direct Midwest markets were unavailable Thursday morning.
U.S. pork packer margins on Thursday were estimated at a negative $6.45 per head versus a negative $3.50 on Wednesday and a positive $8.50 a week ago, according to HedgersEdge.com.
USDA’s Thursday morning mandatory wholesale pork price, calculated on a plant-delivered basis, was $86.71/cwt, down $2.10 from Wednesday.
Heavy snowfall in parts of Iowa and Minnesota created problems moving some hogs to market, a trader said.
Packers on Thursday processed 415,000 hogs, 6,000 fewer than a week earlier, according to USDA estimates.
— Theopolis Waters writes for Reuters from Chicago.
