Cattle markets mixed as cash-futures spread remains wide - CME

May lean hogs close slightly higher
calendar icon 24 April 2023
clock icon 2 minute read

Chicago Mercantile Exchange (CME) spot live cattle futures eased on Friday, after prices in some cash cattle markets dipped lower than last week, Reuters reported, citing traders.

Still, traders cautioned, the spread between cash and deferred futures prices remains wide - a spread that could tighten in the coming weeks as the US enters peak grilling season.

CME's April live cattle futures settled down 0.125 cent at 173.975 per pound. Most-active June live cattle contract, which closed at a sharp discount to cash prices, settled at 164.525 cents, up 0.175 cent.

Cash trades this week were steady at around $175 per hundredweight (cwt) in the South, and dipped at $180 to $183 per cwt in the Midwest, said Ross Baldwin, a cattle analyst at trading firm John Stewart & Associates.

Baldwin said cattle futures also gained a boost on the day on weekly beef export numbers being up noticeably from the previous week, according to US Department of Agriculture (USDA).

In an analyst note on Friday, brokerage firm StoneX said some packers were reportedly taking downtime on Friday and in the coming weeks, to manage tight supplies and thinning profit margins.

Meanwhile, USDA's monthly Cattle on Feed report, released Friday after market close, could weigh on futures next week, said two traders.

The government said the number of US cattle on feed, as of April 1, was down 4% from a year earlier - which beat analysts' expectations. But the bigger surprise, traders said, was March placements of cattle into feedlots: USDA reported it was down 1%, compared with expectations for a 5.2% drop.

Tight supplies boosted feeder cattle futures, traders said, as all deferred contracts through March 2024 reached new contract highs on Friday.

CME April feeder cattle ended down 1.250 cents at 203.775 cents per pound. On Friday, the most-active feeder cattle contract moved from May to August, which finished up 0.350 cent at 229.875 cents.

The hog market firmed on the day, though five contracts - including May and June - hit new contract lows mid-session.

CME May lean hogs closed up 0.20 cent at 77.025 cents per pound. June lean hogs settled up 1 cent at 86.075 cents per pound.

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