CME update: cattle futures rise on improved US beef prices and an upswing in demand

US cattle futures rose on 7 May as strong beef prices and demand for red meat that catapulted margins for beef processors.
calendar icon 10 May 2021
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Reuters reports that Meat demand is high as federal stimulus checks have increased incomes and prompted consumers to spend more at supermarkets and restaurants, analysts said. COVID-19 vaccinations are also prompting people to eat out more, they said.

Prices for select cuts of beef shipped to wholesale buyers in large boxes increased by $0.91 to $209.27 per cwt, according to the US Department of Agriculture. Prices for choice cuts eased by $0.49 to $305.88 per cwt after climbing recently.

"People want to pay up for steaks," said Ted Seifried, chief ag market strategist at The Zaner Ag Hedge Group. "People want beef."

CME June live cattle futures ended up 0.550 cent at 116.025 cents per pound and touched their highest price since 21 April. The contract recovered slightly after sliding 10% from 8 April to 4 May.

August feeder cattle futures finished 0.875 cent higher at 144.275 cents per pound. It also suffered a 10% slide over the past month.

With demand strong, margins for beef packers reached $732.80 per head, up from $651.10 a week ago, according to livestock marketing advisory service

Feedlot operators are angry they are missing out on such huge profits, brokers said, as feeders' margins are being hurt by soaring costs for grains used for feed.

"A big problem in the market is the packers have too big a margin," said Don Roose, president of Iowa-based commodities brokerage US Commodities.

Starting 1 June, CME will raise the daily trading limit for feeder cattle futures to 6.25 cents per pound from 5 cents, according to the exchange. The live cattle limit will increase to 5 cents from 4 cents.

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Source: Reuters

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