By Theopolis Waters
CHICAGO, Oct 23 (Reuters) – Before settling mixed, Chicago Mercantile Exchange live cattle on Wednesday spiked to a nine-month top in response to record-high cash prices.
Cash cattle in Texas and Kansas fetched mostly $132 per hundredweight, up $3 from last week, feedlot sources said. That price surpassed the previous record high of $130 for the week ending March 2, 2012.
“Everything that was supposed to happen fundamentally came together for the cattle market,” said U.S. Commodities analyst Don Roose, who also cited rising wholesale beef values.
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Wednesday afternoon’s average wholesale choice beef price, or cutout, was at $200.79 per cwt., up $1.46 from Tuesday, which eclipsed the June 18 price of $200.24.
Wednesday’s strong cash cattle and beef prices reflected the lowest U.S. cattle herd in 61 years.
Fewer cattle are available now after prolonged drought in parts of the United States in recent years damaged crops and pasture. That sent last summer’s feed costs to all-time highs and forced ranchers at that time to reduce their herds.
However, CME October live cattle settled just off their session highs on profit taking after four straight days of advances.
Other contracts finished in negative territory on selling with the view that those months may be too pricey based on Wednesday’s cash sales. And traders were concerned that consumers would switch to less-costly pork if beef prices trend higher.
Live cattle October closed 0.700 cent per pound higher at 131.800 cents. It earlier hit an eight-month high of 132.150 cents.
December finished at 132.750 cents, down 0.225 cent.
CME feeder cattle mimicked live cattle’s mixed settlement.
October closed at 166.150 cents per lb, up 0.100 cent, while November slipped 0.225 cent to 167.625 cents.
SPREADS STIR MIXED HOGS
CME hogs settled mixed.
Spread traders sold December futures and bought deferred months amid uncertainty about near-term cash hog prices and the big drop in wholesale pork values, traders said.
USDA’s data showed the wholesale pork price, or cutout, was at $93.49 per cwt. on Wednesday afternoon, $2.01 lower than on Tuesday. The $5.82 fall in ham prices pressured the cutout.
Wednesday afternoon’s average price of hogs in the closely watched Iowa/Minnesota market was at $86.70 per cwt., up 28 cents, but down 18 cents at $86.83 in the eastern Midwest.
More hogs are entering the market “inch by inch,” said Roose.
And newly harvested corn and cooler weather are quickly allowing hogs to put on weight, adding tonnage to the market, he said.
December hogs closed 0.425 cent per lb lower at 88.150 cents and February finished down 0.325 cent at 90.200 cents.
