Chicago | Reuters — U.S. cattle futures reached a one-year high on Friday on concerns that cold, snowy weather next week may tighten supplies by slowing weight gain and transportation of livestock.
Snowfall is expected to increase across the U.S. Plains, where the temperature outlook also is trending colder, according to weather forecaster Radiant Solutions.
Cattle typically do not gain weight as quickly in cold weather because they consume feed to generate body heat.
Futures prices may get an additional boost on Monday from a lower-than-expected number of cattle placed in feedlots during December, traders said.
The U.S. Department of Agriculture, after the close of trading, said there were 11.7 million head of cattle being fed ahead of slaughter as of Jan. 1, up two per cent from a year earlier.
However, placements of cattle in feedlots during December totaled 1.77 million head, which was down two per cent from a year earlier, according to USDA. Analysts had expected higher placements, indicating that supplies may be tighter than projected later this year.
“It does lighten up the supply flow going into the summer and early fall as well,” said Rich Nelson, chief strategist for broker Allendale in Illinois.
Chicago Mercantile Exchange (CME) February live cattle rose 1.05 cents, to 128.675 cents/lb. (all figures US$). The session high of 128.75 cents was the highest for a front-month contract since February 2018.
April live cattle advanced 0.275 cent, to 128.875 cents/lb.
March feeder cattle futures lost 0.325 cent to 142.9 cents/lb.
CME lean hog futures also ended down as the market came under renewed pressure from large supplies, traders said. The April contract slipped 0.5 cent, to 55.45 cents/lb.
USDA, in a separate report, said total U.S. supplies of frozen beef in cold storage facilities at the end of December reached 495.624 million lbs. That was up from 488.057 million at the end of December 2017.
Total supplies of frozen pork were 505.287 million lbs., up from 490.047 million at the end of December 2017, according to USDA. Supplies of frozen pork bellies in cold storage were 42.251 million lbs. at the end of December 2018, up from 39.62 million a year earlier.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.