By Theopolis Waters
CHICAGO, Jan 10 (Reuters) – Chicago Mercantile Exchange live cattle futures gained moderately on Friday, and posted advances for a fifth straight week, as cash and wholesale beef prices again set new highs, traders said.
On Friday, cash cattle in the U.S. Plains traded at $139 to $140 per hundredweight, topping last week’s record of $137 to $138, feedlot sources said.
The afternoon’s wholesale price, or cutout, for Choice beef was $214.98 per cwt., up $2.93 from Thursday’s record high, according to the U.S. Department of Agriculture.
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At $211.58 per cwt. on Friday, Select cuts jumped $2.53 from Thursday and extended its record streak for a sixth straight day.
Recent harsh weather further squeezed already tight supplies that put cattle and wholesale beef prices on their record-setting pace, analysts said.
“Beef keeps going up and last week’s record prices emboldened feedlots this week. I don’t know where the upward movement is going to stop,” said Oak Investment Group president Joe Ocrant.
Higher beef costs for retailers and restaurants helped improve packer operating margins.
Beef packer margins for Friday were estimated at a negative $46.25 per head, compared with a negative $57.55 per head on Thursday and negative $95.10 a week ago, as calculated by HedgersEdge.com.
February live cattle closed 0.150 cent per pound higher at 136.700 cents, and April finished at 136.975 cents, up 0.100 cent.
Higher corn prices following USDA’s bullish crop production report on Friday, dragged CME feeder cattle from all-time highs.
More costly corn could reduce feedlot demand for young cattle for fattening.
January feeder cattle closed at 168.650 cents per lb., 0.500 cent lower. March finished at 167.650 cents per lb., down 1.175 cents.
HOG FUTURES UP DESPITE LOWER CASH
CME hogs finished higher as short-covering and fund buying offset bearish cash hog and wholesale pork prices, traders said.
The afternoon’s average price of hogs in the closely watched Iowa-Minnesota market tumbled $2.17 per cwt. from Thursday to $76.08, based on USDA’s data.
Separate government data showed late-Friday’s wholesale pork price at $84.05 per cwt, down 59 cents from Thursday.
Investors initially sold CME hogs with the belief that the break in wintry weather will thaw snow-packed country roads, allowing more hogs to safely reach packing plants.
Lower cash hog bids tend to pressure futures, but investors may be taking a more forward view of the market, Citigroup futures specialist Art Liming said.
“Higher grain prices may be lifting the market a little. If producers have to pay more for the grain, they are going to want more for their hogs,” he said.
February hogs closed 0.575 cent per lb. higher at 85.825 cents, and April ended at 91.000 cents, up 0.275 cent.
