March 9, 2011

US cattle futures ascend on stock gains

US live cattle futures ended higher, supported by gains in stock prices and a renewed positivism on the economy.

April live cattle were up US$0.0120, or 1.1%, at US$1.1480 a pound. April closed at its highest level since February 18. June gained US$0.0115, or 1.0%, to close at US$1.1590 a pound, also its highest settlement price since February 18.

Feeder cattle closed higher as well on spillover support from live cattle and declining corn prices. Lower corn prices mean cheaper feed costs for cattle producers, enabling them to pay more for the young replacement animals to be placed into the feedyards for fattening.

Easing of oil crude oil prices contributed to a rebound in stock prices, and that in turn helped generate more buying interest in cattle futures, brokers said. Beef consumption can be affected by the economic outlook as consumers must choose between the more expensive beef cuts and lower cost protein options.

Concerns that a late-season snowstorm could stress cattle in parts of Kansas, Nebraska and the upper Midwest also contributed to the buying in live cattle Cold, wet and sloppy feedyard conditions make it more difficult for the animals to move about or rest comfortably. In addition, more of the feed consumed goes to maintaining body temperature, leaving less for growth. Poorer performance in the feedyards and lighter carcass weights could reduce beef output in the near-term, supportive for prices.