CME update: live cattle futures extend their rally as beef prices climb

US live cattle futures rose on 11 May for a fifth straight session, following high-flying wholesale beef prices.
calendar icon 12 May 2021
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Reuters reports that feeder cattle futures also advanced but gains were muted as corn futures rallied, signaling higher costs to bring cattle up to market-ready weight.

CME June live cattle futures settled up 0.400 cent at 118.625 cents per pound, with August up 1.700 cents at 122.050 cents. CME August feeder cattle futures finished up 0.150 cent at 148.850 cents per pound.

Wholesale prices for choice cuts of beef rose $3.26 on Tuesday to $312.37 per cwt, the highest in nearly a year, while select cuts rose $2.58 to $296.34 per cwt, according to the US Department of Agriculture.

Beef prices have been climbing steadily since mid-March, reflecting consumer demand ahead of the summer grilling season and the reopening of restaurants as the US economy bounces back from the coronavirus pandemic.

"The barbecue season is never going to be better than this year," said Terry Roggensack, analyst with The Hightower Report. "The government is telling us that the safest way to go back and see friends and family, or even have business get-togethers, is outside, in a barbecue setting," he said.

However, he cautioned, beef demand could slow after the US Memorial Day weekend, once retailers have booked the bulk of their needs.

Strong beef prices lifted packers' profit margins to an estimated $752.50 per head of cattle by Tuesday, up from $685.70 a week earlier, according to livestock marketing advisory service

Yet cash cattle markets have languished in recent weeks due to capacity issues at slaughterhouses that some have tied to tight labor supplies and social distancing policies.

Traders await a monthly USDA crop report on 12 May that will include the government's first official grain supply and demand forecasts for the 2021/22 marketing year.

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Source: Reuters

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