January 17, 2008

US cattle futures to reach record highs in 2008 on meager beef production

US live cattle futures are predicted to escalate this year due to reduced beef production and surging feed costs.

Traders and analysts expected US hog futures to be volatile, with average price to be higher in 2008 as compared last year.
 

A Reuters poll forecast the average spot Chicago Mercantile Exchange (CME) live cattle futures contract price at US$99.44 cents per lb., by the end of 2008, up 9.5 percent from Tuesday's spot February close of US$90.800 cents.
 

The average estimate for CME spot lean hog futures was US$61.44 cents per lb, up 12.4 percent from spot February's Tuesday close of 54.650 cents per lb.
 

Jim Robb with the Livestock Marketing Information Center said that fed cattle prices could climb another 2 percent from 2007's record of over US$90 cents a lb, (or) US$90 per cwt.

Other industry players said cattle prices would be buoyed by rising feed costs and the resulting reduction in the number of cattle on US feedlots for slaughter.
 

Chicago Board of Trade corn futures gained 14 percent in value in 2007 amid a combination of speculative buying, demand from the ethanol sector and strong exports. Prices were at US$5 a bushel in 2008.
 

Analysts also said that herd expansion will cut the number of heifers that may be shipped to packing plants. Any expansion will likely be fully under way by summer, cutting the number of heifers and cows in the slaughter mix.
 

Producers are expected to stick with the breeding numbers throughout 2008. It will take time to cut production levels enough to impact hog numbers and prices, analysts pointed.