By Theopolis Waters
CHICAGO, Jan 22 (Reuters) – Chicago Mercantile Exchange live cattle futures hit a new high on Wednesday, fueled by similar moves in cash and wholesale beef prices, traders and analysts said.
Cash, or slaughter-ready, cattle in Texas and Kansas traded at $147 per hundredweight on Wednesday, surpassing last week’s $142 record in both states.
The morning’s wholesale choice beef price was $240.73 per cwt, rising $1.01 from Tuesday to its tenth straight record, according to U.S. Department of Agriculture data.
Select cuts gained 17 cents to $237.32 for their 14th record in a row.
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“It’s all about supply and demand,” said a feedlot source who cited a “perfect storm” of factors that led to the day’s cash-price record.
Retailers ran short of beef at a time when fewer cattle came to market during bouts of winter weather that slowed down animal weight gains, he said.
Cattle numbers were already tight after years of drought in parts of the United States reduced the herd to its lowest level since the early 1950s, he added.
Much-improved margins, thanks in part to sharply higher wholesale beef prices, gave processors the wherewithal to pay more for cattle.
Beef packer margins for Wednesday were estimated at a positive $125.95 per head, compared with a positive $102.85 per head on Tuesday and a positive $3.00 a week ago, as calculated by HedgersEdge.com.
The USDA cold storage report today should help support beef prices. It said beef supplies in freezers Dec. 31, 2013 were down six percent from the same month last year and down three percent from November.
February live cattle closed 2.125 cents per lb. higher at 143.675 cents, after posting a new contract high of 144.550 cents in electronic trading.
April finished at 141.800 cents, up 1.575 cents. It posted a fresh contract high of 143.200 cents.
CME feeder cattle futures hit a record high with live cattle futures and buy stops.
January closed at 170.475 cents per lb., 0.675 cent higher and made a new contract high of 170.575 cents.
March finished at 170.375 cents per lb, up 2.050 cents, after posting a fresh contract high of 170.800 cents.
MOST HOGS UP ON SPREADS
CME hogs finished mostly higher after investors sold the February contract and bought deferred months in response to record-heavy hog weights, traders said.
February hogs closed at 85.550 cents per lb, down 0.425 cent.
April ended at 92.975 cents, 0.600 cent higher, and June finished at 102.000 cents per lb, up 0.150 cent.
Cash and wholesale pork values could feel pressure from hogs that became heavier after backing up on farms after back-to-back weeks of harsh weather, traders and analysts said.
The morning’s average hog price in the western Midwest direct market slipped 18 cents per cwt to $78.87, according to USDA.
Government data on Wednesday morning showed the wholesale pork price at $86.63 per cwt., 75 cents lower than on Tuesday.
Speculators bought summer hog contracts amid concern that the spread of the Porcine Epidemic Diarrhea virus, which is fatal to baby pigs, would hurt hog production during that period.
The cold storage report showed pork in freezers at the end of December was up two percent from the previous month and up one percent compared to a year earlier.
