June 2, 2010

US cattle futures higher on hopes for strong beef sales

US cattle futures traded higher early on Tuesday (June 1) as investors bet that a warm, rain-free holiday weekend over much of the US had millions of Americans grilling beef steaks on backyard grills.

A higher stock market, boosted by growth in US manufacturing, also helped guide cattle higher.

Meat dealers said it would be later on Tuesday before they can accurately access beef sales during the three-day weekend, but traders and analysts already were predicting brisk sales, largely because of the mild weather.

As a result, restocking supermarket meat cases should be supportive to beef prices, they said.

The three-day US Memorial Day weekend is seen as the kickoff for the summer grilling season, in which enthusiasts shop for beef steaks, pork chops, hot dogs and other cookout favourites.

The rise in cattle futures follows a sharp decline from mid-May, as a seasonal slowdown in beef sales and sharp losses in the stock market had investors selling. Such selling has slowed the past few sessions, stabilising futures.

At 10:20 a.m. CDT (1520 GMT), CME June cattle futures were up 0.275 cent at 90.800 cents per pound and August was up 0.125 cent at 89.375.

Meanwhile, hog futures were lower as investors reacted to lower cash markets, rather than to prospects for robust weekend pork sales.

Cash hog prices have been trending lower as pork plants have reduced production in reaction to fewer hogs and to an expected seasonal slowdown in pork sales.

June hog futures were down 0.750 cent, or about 1%, at 81.100 cents per pound Tuesday morning and the July contract was down 0.375 cent at 82.225.