Chicago | Reuters — Front-month feeder cattle futures on the Chicago Mercantile Exchange hit the highest in nearly 7-1/2 years on Wednesday as falling prices for corn signaled cheaper feed costs, traders said.
CME April feeder cattle futures settled up 1.4 cents at 200.075 cents/lb. after setting a life-of-contract high of 200.225 cents (all figures US$). Thinly traded March feeders settled up 1.625 cents at 193.75 cents/lb. after reaching 193.8 cents, the highest on a continuous chart of front-month feeder cattle futures since October 2015.
Corn futures on the Chicago Board of Trade fell more than one per cent after the U.S. Department of Agriculture (USDA) in a monthly report raised its forecast of U.S. 2022-23 corn ending stocks higher than most analysts expected, citing a slow pace of corn export sales.
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Live cattle future ended mixed, with the benchmark CME April contract retreating from a life-of-contract high set on Monday, while deferred contracts closed higher. April live cattle ended down 0.525 cent at 165.45 cents/lb.
Cattle futures have drawn fundamental support in recent weeks from tightening U.S. cattle supplies due to drought.
Nonetheless, USDA in its monthly report raised its estimate of 2023 domestic beef production, citing increased placements of cattle in feedlots in the first quarter of 2023. The government trimmed its 2023 pork production estimate due to light carcass weights.
CME lean hog futures closed mostly higher, led by the nearby April contract which settled up 0.95 cent at 85.75 cents/lb. June hogs rose 0.2 cent to end at 100.275 cents.
Firming cash hog and wholesale pork prices lent support. The CME lean hog index, a two-day weighted average of cash hog prices, rose by 18 cents to $79.09/cwt. For pork, USDA priced the carcass cutout late Wednesday at $87.66/cwt, up 64 cents from Tuesday and the highest since Feb. 20.
“People are looking for the cutout to go up as the (cash) hog rally starts,” said Dan Norcini, an independent livestock trader.
Traders await USDA’s weekly export sales report on Thursday for a gauge of export demand for U.S. beef and pork.
In global news, Brazil’s Agriculture Minister Carlos Favaro said he will move forward a planned trip to China to later in March as Latin America’s largest economy aims to resume beef exports halted by a case of BSE.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
