June 17, 2011

 

US cattle catch up on daily limit

 

 

After beef plants offered US$3-4 more for cattle in the major cash markets of Texas, Kansas, and Oklahoma, US cattle closed up the daily limit in the four lead contracts on Thursday (Jun 16).

 

Hog futures closed higher, but gains were more modest after gains earlier this week.

 

Beef plants, owned by such firms at Tyson Foods Inc (TSN.N), JBS SA (JBSS3.SA), Cargill Inc CARG.UL, and National Beef Packing Co NBEEF.UL, paid up to US$109 per cwt for slaughter-ready steers and heifers, cattle sources said.

 

Buying in cattle futures also was fuelled by active beef sales, some of which were for export, traders said.

 

"The boxed beef movement was the largest for a Wednesday since November 2009," said a broker. "The export figures this morning were real good and beef packers have good margins."

 

USDA on Thursday reported beef export sales last week at 15,800 tonnes, the most in three weeks, and put year-to-date export sales up 32.5% from 2010.

 

Beef plants have had good profit margins and on Thursday, the average margin was estimated at US$46.20 of each head of cattle processed into beef, according to livestock analysis firm HedgersEdge.com.

 

At the CME, the four lead live cattle futures contracts closed up the three-cent limit, with June 2LCM1 up 2.888% at 107.200 cents, August 2LCQ1 up 2.86% at 107.85 cents, October 2LCV1 up 2.7% at 114.025 cents, and December 2LCZ1 up 2.62% at 117.700.

 

Feeder cattle rose the three-cent limit, pulled up by higher live cattle and by another big drop in corn futures. Corn futures have dropped 11% this week and lower prices for the feed grain can boost demand for feeder cattle.

 

August feeders 2FCQ1 closed up three cents, or 2.36%, at 129.975 cents per lb and September 2FCU1 up three cents, or 2.34%, at 131.250.

 

Hogs finished higher after sharply higher cash markets this week and expected higher cash prices today (Jun 17). Hog prices normally increase in late spring, early summer because of fewer market-ready animals then. This year strong pork exports have given the market added support.

 

Iowa/Minnesota is largest US hog market and price changes there closely watched and can prompt sudden reactions in the futures. USDA reported Wednesday's (Jun 15) average price was up US$6.21 per cwt 100 lbs at US$95.39.

 

Chicago traders said cash prices could top US$100 per cwt.

 

At the CME, July hogs 2LHN1 closed up 0.250 cent at 95.500 cents per lb, the highest for a lead hog contract in about six weeks. The August hogs 2LHQ1 closed up 0.700 cent, or 0.74%, at 95.225 cents per lb.