September 2, 2010
US cattle futures end higher on favourable beef sales
US cattle futures closed higher on Wednesday as stock prices signalled an improving economy and better beef sales.
October cattle had been pressured for seven consecutive days by forecasts for slowing beef sales and lower beef prices. Yet, the decline in beef prices has been relatively tame, which on Wednesday may have encouraged bullish cattle traders in light of the stock market rally.
Early on Wednesday, USDA reported the average choice beef price, called a cutout, at US$163.03 per cwt, down 61 cents from Tuesday. The cutout is down less than 0.8% from the summertime high of US$164.30 set last week.
Beef prices have been supported by strong exports and strong retail sales, analysts said. Restaurant sales remain weak as the economy struggles. Cash cattle traded at US$97 per cwt on Tuesday and Wednesday, down US$2.50 from sales last week.
Analysts expected lower cash cattle sales this week, predicting that beef plants would need fewer cattle for next week's holiday, reducing production. Beef plants will be closed on Monday's US Labor Day holiday.
October live cattle closed up 0.475 cent at 97.750 cents per lb and December was up 0.550 at 100.600. October posted its seventh consecutive loss in overnight electronic trade and equaled Tuesday's two-week low before firming in pit trade.
Feeder cattle futures were lower, pressured by a lower CME feeder index and CBOT corn futures reaching a 14-1/2 month high. The index is an average cash price and the latest index was 114.47 cents, down 0.26 cent.
September feeders ended down 0.225 cent at 113.875 cents per lb and October was off 0.250 at 114.850 cents. Both months posted two-week lows.
Meanwhile, Argentina's beef slaughterhouses and exporters are struggling in the face of high live cattle costs and low sale prices for table-ready meat, leading a number to shut down or trim unprofitable operations.
The companies are having a tough time getting enough cattle after a prolonged drought and government policies designed to keep prices down spurred ranchers to scale back herds last year.
