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Cattle futures hit fresh all-time high

01/16/2014 @ 2:38pm

U.S. cattle futures settled at fresh all-time highs in nearly every contract at the close of the trading session, lifted by new peaks for wholesale beef and cash cattle prices.

Supplies of slaughter-ready cattle remain historically small, forcing meat processors and, in turn, retailers, to pay up to fill orders for beef products.

February live-cattle rose 0.72 cent, or 0.5%, to $1.4015 a pound at the Chicago Mercantile Exchange, well off intra-day highs, but notching a new closing record for any front-month contract. April live cattle advanced 0.27 cent to $1.3922 a pound, the highest closing price in the lifetime of that contract. Other contracts ended slightly higher.

Feeder-cattle for January picked up 0.4 cent, ending at $1.6980 a pound.

Cattle futures have been underpinned by a sharp rally to new highs in wholesale beef and cash market prices. If retailers are willing to pay up for beef products like hamburgers and roasts, processors have more incentive to aggressively seek slaughter-ready cattle in the negotiated markets across major cattle feeding states.

Wholesale choice-grade beef prices Thursday surged to $227.52 per hundred pounds, according to the U.S. Department of Agriculture, breaking the new records set Monday, Tuesday and again Wednesday. Select-grade prices climbed to $224.46, also an all-time high.

So far this week, cash sales have climbed as high as $1.44 1/2 a pound live and $2.29 a pound dressed for marketed cattle in Nebraska, significantly higher than current futures prices.

Gains in later-expiring futures have been curbed by speculation that meatpackers and retailers will soon begin resisting the higher prices if they are unable to pass on the costs to budget-conscious consumers.

"When you're at all-time highs it's always a question of how much more we can put on" to cattle and beef prices, said Clark Neighbors, head of brokerage at BIS Commodities in Cedar Rapids, Iowa.

"The cure for high prices is high prices," said Mr. Neighbors.

Hog futures also rose, lifted by sentiment that demand for pork products by grocery stores, restaurants, and foreign buyers may also increase due to the sharp gains in beef prices. Pork and chicken are both cheaper proteins than beef traditionally, and can benefit from reduced demand for beef.

February hogs picked up 0.27 cent, or 0.3%, to 86.87 cents a pound.

Write to Kelsey Gee at kelsey.gee@wsj.com

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(END) Dow Jones Newswires

January 16, 2014 15:20 ET (20:20 GMT)

DJ U.S. Cattle Futures Close at Fresh Highs on Beef, Cash Price Surge->copyright

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