CME feeder cattle at record high on strong calf prices, weaker corn

By Theopolis Waters

CHICAGO, May 1 (Reuters) – Chicago Mercantile Exchange feeder cattle futures on Thursday closed at an all-time high, with some contracts up by the three-cent price limit, fueled by costly prices for young calves for fattening, traders said.

Prices for light-weight feeder cattle are “on fire,” said Jim Clarkson, a broker with A&A Trading Inc. This week, some prices for feeder cattle in local markets surged as much as $5 per hundredweight (cwt) ignited by tight supplies.

Feedlots are paying more for young calves, or feeder cattle, after several years of drought in parts of the United States shrunk the herd to a 63-year low.

CME feeder drew more support from live cattle market gains and lower corn prices.

May closed 2.750 cents per lb higher at 183.950 cents, and set a new contract high of 184.000 cents in electronic trading.

August and September ended up their 3.000-cent limit at 190.475 cents and 190.975, which are also fresh highs for those contracts.

LIVE CATTLE CHARGE TO NEW HIGHS

CME live cattle contracts rose to new highs, with support from fund buying and futures’ discounts to expectations for steady cash prices this week, traders said.

“Higher futures will embolden feedlots to hold out for more money for their cattle,” said Oak Investment Group president Joe Ocrant.

Packers may balk at spending more for cattle as beef demand lags, partly due to the soggy, wet start of the spring grilling season in parts of the country, he said.

On Thursday, cash cattle bids surfaced in Texas and Kansas at $142 per cwt, and $145 in parts of Nebraska, feedlot sources said.

Last week, cash cattle in Texas and Kansas traded at $145 to $146 per hundredweight (cwt), with $146 to $148 sales in Nebraska.

Thursday morning’s wholesale choice beef price fell $2.81 per cwt from Wednesday to $230.29. Select cuts dropped 54 cents to $221.75, based on USDA data.

June live cattle closed up 2.050 cents per lb to 139.250 cents, and notched a new contract high of 139.500.

August finished 2.500 cents higher at 138.575. It marked a fresh contract high of 138.650 cents.

MIXED HOGS FINISH

Nearby CME hogs were weakened by the morning’s huge drop in wholesale pork values, traders said.

USDA data showed the morning’s wholesale pork price stumbled $2.32 per cwt from Wednesday to $113.48.

Futures’ price premium to CME’s hog index, at 115.62 cents, deterred buyers.

But expectations of tight hog supplies as the fatal Porcine Epidemic Diarrhea virus (PEDv) spreads on U.S. hog farms pushed up deep-deferred futures contracts.

May hogs closed 0.300 cent per lb lower at 117.375, and June down 0.325 cent at 122.800 cents.

July ended up 0.300 cent to 122.700, and August rose 0.950 cent to 122.900 cents.

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