CME: Expectations Around Retailer Demand Push Futures Higher

US - Live cattle futures rallied into the close to finish $1.05 to $1.50 higher in line with expectations about retailer demand.
calendar icon 18 April 2013
clock icon 2 minute read

The high-range close should give bulls momentum heading into today's open, write ProFarmer analysts.

Futures were supported by expectations that retailer buying of beef would soon ramp up. Wenesday morning's boxed beef report helped propel that thought, as Choice values rose $1.51 and Select was up 86 cents on strong morning movement of 138 loads.

June cattle closed sharply higher on the day as a turn up in the beef market and a perception that the higher beef might help improve margins and stabilize the cash market helped to support. In other words, traders believe that both June and August cattle are too discounted to futures, say market experts at CME.

The market saw choppy and two-sided trade early in the session but buyers turned active and the move over Tuesday's highs attracted significant buying support. The market was trading sharply higher on the day into the mid-session and managed to jump to a 6-session high into the close.

The steep discount of futures to the cash market, higher beef prices this week and strength in the hog market all contributed to the more active buying support. Talk that cash cattle could trade steady this week added to the positive tone after traders have priced-in a weaker cash market earlier this week.

For the USDA Cattle-on-Feed report this week traders see placements down about 1 1/2 per cent from last year for March but there is a wide range of estimates with many traders expecting higher.

Marketings, however, are expected to come in near 94 per cent of last year leaving April 1st on-feed supply down about 6 per cent from last year.

Boxed-beef cut-out values at mid-session were up $1.51 to $191.96 as compared with $190.95 last week at this time.

Slaughter came in right as expected at 121,000 head.

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