By Theopolis Waters
CHICAGO, June 10 (Reuters) – Chicago Mercantile Exchange feeder cattle futures on Tuesday hit a new high for a sixth straight session, driven by a shortage of calves for fattening after several years of drought in the United States hurt crops, traders said.
However, sufficient grazing pastures now are allowing ranchers to nourish animals to heavier weight rather than sending them to feedyards, they said.
“The feeder cattle market is at highs which no one has seen before,” said KIS Futures vice president Lane Broadbent. Expectations of tight feeder cattle supplies over the next 60 days furthered futures’ gains, he said.
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U.S. livestock: Cattle futures come down from highs
Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
CME feeder cattle drew extra support from live cattle market advances and weak corn prices.
August finished 1.650 cents per pound higher at 205.175 cents, and September up 1.925 cents to 205.800 cents.
LIVE CATTLE UP WITH BEEF PRICES
CME live cattle closed higher, supported by strong wholesale beef prices due to reduced slaughters and grocers booking product for summer grilling demand, traders said.
Consumers appear not to be discouraged by high beef prices, especially given pork costs that are also at lofty levels, said Broadbent.
Tuesday morning’s wholesale choice beef price rose 68 cents per hundredweight (cwt) from Monday to $232.61. Select cuts climbed $1.00 to $222.69, the U.S. Department of Agriculture said.
CME live cattle benefited from their discounts to last week’s prices for slaughter-ready or cash cattle.
Last week, cash cattle in Texas and Kansas fetched $145 per cwt, with sales of $146 in Nebraska, feedlot sources said.
So far, investors are looking for cash cattle to trade steady with last week.
Positive beef packer margins and fewer animals for sale this week could underpin cash cattle returns.
However, packers have curtailed production to avoid spending more for supplies that are expected to increase seasonally.
June ended at 143.500 cents, up 0.675 cent, and August up 0.125 cent to 143.400 cents.
HOGS CLOSE MIXED
CME hogs ended mixed with the June contract supported by anticipation of higher cash prices in the near term as packers accommodate this week’s production schedule, traders said.
USDA’s morning direct hog market prices were unavailable. Cash hog prices in the Midwest on Tuesday traded steady, according to hog dealers.
Summer hog futures felt pressure from their premiums to CME’s hog index at 111.23 cents.
Expectations for fewer hogs pegged to the deadly Porcine Epidemic Diarrhea virus lifted deep-deferred CME hog contracts.
On Wednesday, some traders may exit the June contract outright or by simultaneously buying back months. June futures will expire on June 13.
June hogs ended 1.000 cents per lb higher at 115.300 cents. July closed down 0.800 cent to 125.150.
