CHICAGO, March 31 (Reuters) – Chicago Mercantile Exchange feeder cattle futures on Thursday settled up their 4.5-cents per lb maximum daily price limit, spurred by the morning’s bearish government grain report, traders said.
U.S. farmers intend to plant 93.6 million acres of corn and 82.2 million acres of soybeans in 2016, the U.S. Department of Agriculture said on Thursday.
Potentially cheaper feed ahead is good news for feedlot operators because it cuts their costs of feeding cattle, a trader said.
April feeder cattle closed limit up at 157.075 cents per lb. The limit will be expanded to 6.750 cents on Friday.
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CME live cattle recouped some of their recent losses, aided by short-covering on the last session for the quarter and future’s discounts to market-ready, or cash, prices, traders said.
April live cattle ended up 0.575 cent per lb to 132.925 cents, and June closed 0.950 cent higher at 124.025.
So far, southern Plains cash cattle brought $133 to $134 per cwt, $2 to $3 below last week’s sales, said feedlot sources. They said remaining feedyards are holding out for more money.
Processors slashed cash bids given their sagging bottom lines, current futures prices and seasonally slow wholesale beef demand.
The morning’s wholesale choice beef price, or cutout, dropped 87 cents per from Wednesday to $221.00. Select cuts fell $1.62 to $211.06, the USDA said.
The average beef packer margin on Thursday was estimated at a negative $38.95 per head, down from a negative $15.25 on Wednesday and a negative $2.20 a week ago, as calculated by HedgersEdge.com.
Feeder cattle future’s limit-up move helped lift back-month live cattle contracts.
Typically, live cattle futures rally in sympathy with feeder cattle, said Oak Investment Group president Joe Ocrant. But in reality, less-costly corn means more cattle will be put on feed, resulting in more animals for slaughter later, he added.
Sell stops, technical selling and sharply lower wholesale pork prices pressured CME lean hogs, traders said.
April closed 0.575 cent per lb lower at 68.350 cent, May ended down 0.050 cent to 77.225 cents and June finished 0.700 cent lower at 80.850.
The morning wholesale pork price on Thursday tumbled $1.63 cents per cwt from Wednesday to $75.96, snapping a three-day win streak, based on USDA data.
Retailers bought most of the pork needed for early April grilling promotions after the Easter holiday, traders and analyst said.
