Chicago Mercantile Exchange (CME) live cattle futures turned higher on Friday, driven by supportive domestic and wholesale beef demand that stirred short-covering, traders and analysts said.
CME live cattle rose ahead of Friday’s U.S. Department of Agriculture monthly cattle-on-feed report at 2 p.m. CST.
Analysts expect the data to show the number of cattle placed into feedlots last month rose slightly from a year earlier.
The government will simultaneously release its monthly cold storage data including beef and pork inventories for January.
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Futures initially garnered support from USDA’s weekly beef export data. It showed U.S. beef exports to Japan soared to their highest in more than two years last week after Tokyo eased import rules tied to the outbreak of mad cow disease in 2003.
Modest advances in wholesale beef prices contributed to futures buying, traders said.
Investors awaited prices for unsold cattle in the northern Plains. Residents in the region are digging out from heavy snowfalls that slowed transportation of livestock to packing plants.
Packers on Friday processed 103,000 head of cattle, down 7,000 from a week earlier and 11,000 fewer than a year ago during the same period, based on USDA data.
"Because of the weather, I’m not letting my cattle go below $125 per hundredweight (cwt)," a Nebraska feedlot manager said (all figures US$).
This week, cattle in Texas moved at $123/cwt, steady with last week, feedlot sources said. Cash bids elsewhere in the Plains remained at $123 against asking prices of $125 or higher, they said.
Packers would like to control cash spending to improve their margins and lift wholesale beef values.
The wholesale price for choice beef on Friday morning was $182.74/cwt, up 39 cents from Thursday; select cuts rose 33 cents to $180.53, according to USDA.
HedgersEdge.com put the average beef packer margin for Friday at a negative $50 per head, compared with a negative $50.70 on Thursday and a negative $66.90 on Feb. 15.
Spot February live cattle closed at 126.35 cents per pound, up 1.05 cents. Most-actively traded April ended 0.4 cent higher at 128.225 cents.
CME feeder cattle tracked the higher live cattle contracts.
March feeders settled 0.55 cent/lb. higher at 141.25 cents. April ended at 143.775 cents, up 0.6 cent.
Hogs track lower cash
Hog futures stretched losses into a fifth consecutive session, with packers pressuring cash hog bids to improve their margins, analysts and traders said.
USDA data showed the average price for hogs in the most-watched Iowa/Minnesota market on Friday morning at $75.12/cwt, $2.94 lower than Thursday.
The average pork packer margin for Friday was at a positive $2.95 per head, compared with a positive 60 cents on Thursday and a negative $12.30 on Feb. 15, according to HedgersEdge.com.
April hogs ended at 81.65 cents/lb., down 0.725 cent, and June closed 0.75 cent lower at 90.95 cents.
— Theopolis Waters writes for Reuters from Chicago.
