Chicago | Reuters — Chicago Mercantile Exchange live cattle futures gained for a third straight day on Wednesday, with packers eyeing fewer available cattle as the U.S. Plains digs out from wintry weather, traders said.
They said that while some processors have resumed normal operations, others still found it difficult to get employees and cattle to plants.
On Wednesday packers processed 98,000 cattle, down 11,000 from last week, based on U.S. Department of Agriculture estimates.
Investors partly attributed Wednesday’s slaughter shortfall to a few packers that cut kills to improve their margins and boost wholesale beef prices.
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Wednesday’s average beef packer margin was a negative $15.05 per head, up from a negative $27.75 for Tuesday and down from a positive $8.70 a week ago, as calculated by HedgersEdge.com (all figures US$).
The morning’s wholesale choice beef price slipped 35 cents/cwt from Tuesday, to $222.12. Select cuts increased 42 cents, to $218.05, said USDA.
Future’s discounts to last week’s $138/cwt prices for market-ready, or cash, cattle further encouraged buyers that are waiting to see how much packers pay for supplies later this week.
So far, processors have not responded with bids from feedlots in Texas and Kansas that priced cattle at $142-$144/cwt.
April live cattle received an added boost from fund buying after the contract rolled through the 100-day moving average of 135.04 cents.
February live cattle closed up 1.125 cents/lb. to 136.85 cents, and April ended one cent higher at 135.75.
CME live cattle futures buying underpinned the exchange’s feeder cattle contracts. March feeders closed up 0.1 cent/lb. to 157.95.
Higher hog market settlement
Weather-related plant closures and seasonally tight supplies encouraged CME lean hog futures buyers, traders said.
Spot February finished up 0.35 cent/lb., to 64.55 cents; April ended 0.575 cent higher at 69.675.
The government estimated Wednesday’s slaughter at 395,000 head, down from 438,000 last week.
Wednesday morning, cash hogs in the Midwest traded steady ahead of an expected big Saturday kill, including some plants making up downtime after Tuesday’s blizzard, said regional hog dealers.
Retailers bought pork sparingly after stockpiling product in advance of the storm, analysts and traders said.
The morning wholesale pork price on Wednesday dropped $1.13/cwt from Tuesday to $77.24, mostly pressured by $4.52 lower loin costs, USDA said.
— Theopolis Waters reports on livestock futures for Reuters from Chicago.
