Cattle futures notch new highs as supply tightens
Source: Live Mint
CHICAGO, Jan 23 (Reuters) – Chicago Mercantile Exchange live and feeder cattle futures shot to new life-of-contract highs on Thursday, as a spate of freezing weather restricted an already-tight cattle supply and consumer demand remained steady, analysts said.
Cattle take longer to hit market-ready weights in cold temperatures, as their bodies expend energy staying warm instead of putting on weight.
The cold front gripping much of the U.S. Plains has meant feedlots are holding on to cattle for longer waiting for them to gain weight and further tightening supply, analysts said.
Meatpackers, meanwhile, have been willing to pay the higher prices to source animals for their processing plants.
“Packers are out there trying to find cattle and are having a hard time doing so,” Altin Kalo, economist at Steiner Group, said. “The bartering power goes to feedlots, and the packers have to pay up.”
Most-active CME April live cattle contract ended up 0.95 cents at 200.725 cents per pound. All live cattle contracts reached lifetime highs for the second trading day in a row.
CME March feeder cattle settled up 1 cent at 274.075 cents per pound – with January, March and April contracts all reaching lifetime highs.
Solid demand from consumers has continued to drive cattle prices higher as low unemployment figures and strong equities markets make U.S. consumers more willing to pay up for pricier beef, analysts said.
Meanwhile, traders continued to wait for the U.S. Department of Agriculture to resume cattle imports from Mexico, after the U.S. blocked shipments in November over the discovery of the New World screwworm pest in Mexico.
In lean hogs, CME April hogs settled up 0.575 cent at 87.275 cents per pound, as pork cutout values remained relatively flat and market players weighed consumer demand for pork.
“Managed money still has a large net long, but we’ll need to see more evidence that demand is there and that prices will hold on,” Kalo said. (Reporting by Heather Schlitz; Editing by Shailesh Kuber)
