July 22, 2010

US cattle futures rise as extreme hot weather may curb supply

Cattle futures climbed to a nine-week high on speculation that US beef supplies will be limited by unusually hot weather that killed some animals and threatened to halt weight gains for the feedlot herd.

The Kansas Livestock Association has reported cattle deaths from "extreme temperatures." Heat indexes in parts of Kansas, the third-largest producing state, Oklahoma and Missouri may reach as high as 110 degrees Fahrenheit (43 degrees Celsius) today, according to the National Weather Service.

Cattle futures for October delivery rose 0.425 cent, or 0.4%, to 94.925 cents a pound on the CME, after touching 95.025 cents, the highest level for a most-active contract since May 13. Feeder-cattle futures for August settlement increased 0.175 cent to US$1.1465 a pound.

Steers in the US weighed an average 1,327 pounds (602 kilogrammes) at slaughter in the first two days of this week, 3.6% less than in the same period a week earlier, USDA data show.

Heat-related cattle deaths have occurred since about July 16, primarily in central and western Kansas, said Todd Domer, a spokesman for the Kansas Livestock Association, a Topeka-based trade group.

Cattle also gained as wholesale choice-beef prices climbed to US$1.5562 a pound at midday, the highest level since July 7, according to the USDA.

Meanwhile, hog futures for October settlement rose 1.125 cents, 1.5%, to 75.625 cents a pound on the CME. The most-active contract is up 30% in the past year.

Futures were supported after wholesale pork jumped 1.7% yesterday to 82.82 cents a pound, the highest level since July 12.