Sandy weighs on livestock prices
U.S. live-cattle futures ended mixed Monday, as traders weighed a tightening of cattle supplies against expectations that Hurricane Sandy could disrupt beef shipments and reduce near-term consumer demand on the Eastern seaboard.
Live cattle for October delivery, a contract that expires Wednesday, fell 0.12 cent, or 0.1%, to $1.2537 a pound at the Chicago Mercantile Exchange. The most-active December contract rose 0.02 cent, or 0.02%, to $1.2527 a pound.
Trading was light, as Sandy caused the shutdown of stock and options markets in New York and prompted some traders in Chicago futures markets to sit on the sideline.
Feeder cattle futures rose. The November contract added 0.60 cent, or 0.4%, to settle at $1.4592 a pound.
Analysts say the hurricane could weigh on cattle-futures markets for longer than the duration of the storm. Retailers may not be prepared to place orders for beef, and shipments may face near-term delays, resulting in a de facto backlog of supplies. As well, demand in the eastern U.S. could fall because many consumers may be without power.
Consumers grappling with severe weather generally stock up on non-perishable goods, bread and water, said Mike Zuzolo, president of Global Commodity Analytics and Consulting in Lafayette, Ind. "You're not going to be buying a lot of meat if your power is going to be out," he said.
In the most recent U.S. Department of Agriculture cattle-on-feed report, which came out earlier this month, the number of available slaughter-ready cattle fell about 2.6% from the same month a year ago. Tightening beef supplies should underpin the market in the coming weeks, as East Coast buyers resume normal business activities.
The Great Plains and western Corn Belt cash cattle markets were quiet Monday, as processors appeared to have sufficient supplies of animals for this week's slaughter schedules.
In the Plains, no bids have been established yet and none are expected until late Tuesday or Wednesday. Trading may not occur until late in the week.
Cattle owners in Texas are asking mostly $1.29 a pound on a live basis while asking prices in Kansas range from $1.28 to $1.29 a pound.
Trading last week occurred at mainly $1.27 a pound live in Texas, western Oklahoma and Kansas. In Nebraska, sales on a live basis ranged from $1.26 to $1.28 a pound, while dressed sales there were mainly at $1.97 a pound.
Choice beef prices at midday rose 79 cents a hundredweight to $197.61 while select fell 43 cents to $179.27 on sales of 87 loads, according to the USDA
The latest HedgersEdge packer margin index was minus $54.30 per head compared with minus $22.95 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 closed lower Monday, slipping on storm-related pressures and already slumping demand.
Lean hog futures shed 1.10 cents, or 1.4%, to 77.80 cents a pound for the December contract at the Chicago Mercantile Exchange. The February contract also fell, declining 1.2 cents, or 1.4%, to 83.25 cents a pound.