Feeder cattle soar limit-up; hogs end higher
U.S. cattle futures extended their midweek rally Thursday, closing sharply higher in many contracts for the second consecutive day.
April live-cattle jumped 1.55 cents, or 1.2%, to $1.289 a pound at the Chicago Mercantile Exchange, the highest closing price for the spot contract since March 5. June futures advanced 1.4 cents, or 1.1%, to $1.2437 a pound.
Stronger cash cattle trade this week sparked gains in futures, amid market sentiment that packers can offer higher prices for slaughter-ready cattle due to rising retail demand for beef. Seasonally, food shoppers tend to increase their spending on meat as temperatures rise in the spring, when they have the option to grill outdoors.
Gains were compounded after the U.S. Department of Agriculture crop report indicated larger-than-expected stockpiles of corn as of March 1, sending prices for the feed grain tumbling.
Feeder-cattle futures surged after the report by their daily exchange-imposed limit, holding the three-cent gains through the close in deferred contracts. March feeder-cattle futures, which expired Thursday, finished just 0.25 cent, or 0.2%, higher at $1.3552 a pound.
The most-active May contract added 3 cents, or 2.1%, at $1.4507 a pound, and other contracts were also limit-up.
In the past few weeks, "futures have rallied and then failed, but it feels a little better this time," said Elaine Johnson, an analyst with brokerage CattleHedging.com in Westminster, Colo.
Trading in the cash-cattle markets turned moderate to active around midmorning Thursday after packers bumped up their bids.
Sales occurred in Texas from $1.27 to $1.28 a pound, up two to three cents a pound from earlier in the week and generally three cents above a week ago.
In Kansas, cattle traded at mostly $1.28, up three cents from a week ago. Prices in Colorado were from $1.28 to $1.29 a pound, three to four cents higher than last week. Live sales in Nebraska were from $1.27 to $1.29 a pound, up three to four cents on the week, and dressed from $2.02 to as high as $2.05, four to seven cents higher than a week ago.
Strength in futures prices along with expectations for tighter supplies of slaughter-ready cattle ahead and stronger demand for beef following the Easter holiday contributed to the strength in cash prices.
The U.S. Department of Agriculture reported choice beef prices at midday fell $1.25 at $188.71 per hundredweight while select slid 46 cents to $188.05 on sales of 174 total loads.
The latest HedgersEdge packer margin index was minus $16.40 a head, compared with minus $15.40 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
U.S. lean-hog futures finished mostly higher, finding technical support amid sentiment that near-term pork demand by U.S. retailers will rise.
April lean hogs added 0.52 cent, or 0.7%, to 80.6 cents a pound at the CME, a two-week high for the spot contract's close. The June contract picked up 0.4 cent, or 0.4%, to 91.07 cents a pound. Other contracts were mixed.