CME update: rising beef prices buoy live cattle futures

US live cattle futures rose on 26 January for a fourth straight session, with deferred months setting life-of-contract highs.
calendar icon 27 January 2021
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Reuters reports that the surge in cattle futures comes as strong beef demand lifts packer profit margins and shored up demand for market-ready cattle.

Chicago Mercantile Exchange April live cattle futures settled up 0.150 cent at 123.100 cents per pound, while June ended up 0.650 cent at 119.475 cents after setting a contract high at 119.700 cents.

Cattle futures drew support from wholesale beef values that have been rising nearly every day since 6 January. The US Department of Agriculture reported choice cuts up another $2.33 at $229.06 per cwt on Tuesday afternoon and select cuts up $1.12 at $217.33.

"The most impressive stats in the meat sector may be the strength in the beef product market, which continue a strong move higher. Beef demand continues to exceed expectations," Arlan Suderman, StoneX chief commodity economist, wrote in a note to clients.

Packer margins for cattle topped $340 per head, according to Denver-based livestock marketing advisory service LLC, raising expectations of a stronger cash trade this week.

Feetlot operators were asking $114 to $115 per cwt for market-ready cattle in Kansas and Texas this week, traders said, following trades last week at around $110 per cwt.

Nonetheless, feeder cattle futures fell, bucking the strength in live cattle, as traders reacted to surging prices for corn that point to rising feed costs.

CME March feeders settled down 2.375 cents at 141.475 cents per pound.

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Source: Reuters

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