Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rallied on Wednesday to their highest level in nearly four weeks, while feeder cattle also stormed higher.
U.S. cattle supplies are tight as drought reduced the amount of pasture available for grazing and drove producers to send more cattle to slaughter over the last year.
“The consumer is still buying beef at a faster pace than we thought,” said Arlan Suderman, chief commodities economist for brokerage StoneX. “We have rationed expert demand, but we have not rationed domestic demand like we thought it would.”
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U.S. livestock: Feeder cattle extend rally to new highs
Chicago Mercantile Exchange feeder cattle futures extended gains to record highs on Wednesday while live cattle futures set a contract high before pulling back.
October live cattle settled 2.75 cents higher at 182.7 cents/lb. and touched their highest price since Aug. 10 (all figures US$).
Brokers said there were no confirmed cash cattle trades that would have sparked the rally in futures.
There was unconfirmed talk of cash trades around $179/cwt in Kansas, which would have been firmer than the market was expecting, Suderman said. Last week, cash cattle traded in Kansas for around $178/cwt.
Live cattle futures hit record highs this summer on supply concerns but have been in a sideways trading pattern for weeks, analysts said. Wednesday’s gains fueled some expectations the market could make a breakout move to the upside.
“It’s still an overall sideways trend but we’re looking like there’s potential for the market to retest the contract highs we made in July,” said Doug Houghton, analyst for Brock Associates.
October feeder cattle ended up 2.175 cents at 256.475 cents/lb.
Boxed beef prices were lower, the U.S. Department of Agriculture said, with choice cuts dropping $1.91, to $313.57/cwt, and select cuts sliding $1.93, to $287.61/cwt.
In the pork market, most-active October lean hog futures ended down 1.3 cents at 81.875 cents/lb. and touched its lowest price in a week.
USDA quoted the wholesale pork carcass cutout at $98.33/cwt, down $0.54.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
