Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed higher on Tuesday for a second session, supported by expectations for a slowdown in supplies of market-ready cattle that should lift cash prices, analysts said.
“The (cattle) numbers start to tighten as we move forward and get closer to August. That is giving some strength to the market,” said Don Roose, president of Iowa-based U.S. Commodities.
CME August live cattle futures settled up 1.925 cents at 121.75 cents/lb., after notching a one-week high at 122.45 cents (all figures US$). The October contract ended up 1.375 cents at 127.175 cents. CME August feeder cattle finished up 0.675 cent at 158.825 cents/lb.
Cattle traded lightly in the cash market at around $120 per hundredweight (cwt) in the southern Plains, roughly steady with last week, the U.S. Department of Agriculture (USDA) said.
Traders shrugged off pressure from softening packer profit margins and a month-long retreat in wholesale beef prices. Choice cuts fell by another $1.66 on Tuesday, to $273.34/cwt, according to USDA, and select cuts fell by $2.03, to $256.74/cwt.
In the hog markets, CME lean hog futures rose for a third straight session on concerns about tightening U.S. hog supplies.
The size of the U.S. hog herd has fallen after some producers euthanized animals last year when COVID-19 outbreaks temporarily closed meat plants. Disease outbreaks have reduced animal numbers as well.
“We are still dealing with disease issues, so that is giving support to the front (futures) months,” Roose said.
USDA on Monday cut its U.S. pork production estimate for 2021, citing reduced expectations for commercial hog slaughtering in the second half of the year.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.