CHICAGO, May 5 (Reuters) – Chicago Mercantile Exchange live cattle futures finished higher for a fifth successive session on Thursday, driven by lighter cattle weights and the morning’s firm wholesale beef prices, traders said.
June live cattle closed 2.175 cents per lb higher at 119.625 cents, and August ended up 2.125 cents at 117.425 cents.
Thursday morning’s wholesale beef values stabilized after falling six straight days, pressured by ample cattle supplies and plentiful low-cost pork and chicken.
The choice beef price, or cutout, Thursday morning rose 79 cents per cwt from Wednesday to $205.53, and select cuts were up a penny at $195.66, the U.S. Department of Agriculture said.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
USDA data for the week ending April 23 showed the average dressed weight of all cattle at 816 lbs, down 7 lbs from the week before. Steers were 8 lbs lower at 870 lbs and heifers shed 13 lbs to 807 lbs.
Beef cutout values may be forging a bottom based on the surprisingly big drop in cattle weights, said Schwieterman Inc broker Domenic Varricchio. “Therefore you’ve got some people improving their cash price outlook for this week,” he added.
Investors expect packers to pay at least $124 per cwt, the same as last week, for market-ready, or cash, cattle based on fewer of them for sale this week and if wholesale beef prices can recover seasonally.
Still, some processors may continue to rein in cash spending to protect their slim margins.
The average beef packer margin for Thursday was estimated at a positive $0.45 per head, down from a positive $4.00 on Wednesday, as calculated by HedgersEdge.com.
Weak corn prices and live cattle market buying drove up CME feeder cattle futures. May finished 3.025 cents per lb higher at 147.950 cents.
CME lean hogs gained modestly on strong U.S. pork exports and spillover support from buying in the exchange’s cattle markets, said traders.
Thinly traded May closed up 0.200 cent per lb to 77.575 cents. Most-actively traded June ended 0.500 cent higher at 82.325 cents.
Thursday morning’s weekly government export report showed U.S. pork sales for the week ending April 28 at 30,300 tonnes, mostly to Mexico. That was from 60,900 tonnes the week before, but the most since 30,400 tonnes for the week ending January 21.
“Pork exports are king. We keep moving it and I think China needs it,” said Varricchio.
