By Theopolis Waters
CHICAGO, Jan 16 (Reuters) – Chicago Mercantile Exchange live cattle on Thursday finished in the plus column for a third straight session, but off record highs set earlier in the day, traders and analysts said.
February live cattle closed 0.725 cents per pound higher at 140.150 cent, after hitting a new contract high of 141.000 cents in electronic trading.
April finished at 139.225 cents, up 0.275 cent. It peaked earlier in the day at a fresh contract high of 139.825 cents.
Futures lagged behind this week’s record-breaking cash prices, fueled by similar moves in wholesale beef values, in anticipation of both markets topping out soon.
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“There are signs that maybe this is a little too far, too fast,” said Allendale Inc. chief strategist Rich Nelson.
As of Thursday, cash cattle in the U.S. plains moved at $142 to $144 per cwt., shattering last week’s $140 record, feedlot sources said.
The morning’s wholesale Choice beef price was $227.52 per hundredweight, up $2.90 from Wednesday to its sixth straight record, according to U.S. Department of Agriculture data.
The Select cutout was $224.46 up $2.55 from Wednesday. That extended the record steak to 10 straight days.
Scarce cattle forced packers to pay more for supplies while passing that cost on to grocers and restaurants, analysts and traders said.
They said retailers likely needed beef to feature after the year-end holidays and restock coolers after last week’s winter storm.
Intended packing plant cutbacks to offset tight supplies and improve their margins appear to have paid off.
Beef packer margins for Thursday were estimated at a positive $27.80 per head, their best since a positive $29.70 on Aug. 23, as calculated by HedgersEdge.com.
FEEDERS
CME feeder cattle slipped from a record high on profit taking in response to the gradual pullback in live cattle futures.
January feeder cattle closed at 169.800 cents per lb., up 0.400 cent. It marked a new contract high of 170.250 cents. March finished at 168.250 cents per lb., up 0.225 cents.
HOGS UP ON DEMAND OPTIMISM
CME hog futures ended higher in anticipation of a cash price and wholesale pork demand turnaround, traders and analysts said.
Pork could benefit from high beef costs, Nelson said. And, packers should be finishing up hogs that had backed up on farms during harsh weather last week, he added.
Government data on Thursday morning showed the wholesale pork price at $86.01 per cwt., $1.05 higher than on Wednesday.
The morning’s average price of hogs in the closely-watched Iowa-Minnesota market was $2.43 per cwt. lower from Wednesday at $76.12, according to USDA.
Bearish spreads limited February futures’ advances but lifted the April contract beyond the 40-day moving average of 91.84 cents, which triggered fund buying.
February hogs closed at 86.875 cents per lb., up 0.275 cent, and April ended at 92.250 cents, 0.700 cent higher.
