CME update: cattle futures make further gains on strong cash trade
US live cattle futures gained on 2 December, finding support in a firming cash cattle market as traders weighed consumer demand prospects.
3 December 2020
2 minute read
Reuters reports that CME February live cattle futures added 0.75 cent to settle at 113.925 cents per pound.
Tighter cattle supplies could begin pushing cash markets higher, whittling away at historically high packer margins, said Dennis Smith, broker at Archer Financial Services.
"If placements have peaked," said Smith, "(packer) margins will begin to narrow, and the leverage will swing a little bit to the feedlot."
Daily cattle slaughter remains strong, with 120,000 head processed 2 December, on track for a bigger week of beef slaughter than a year earlier, despite social distancing measures implemented in slaughterhouses due to COVID-19.
Meanwhile, boxed beef prices stepped back from recent highs, with choice cuts trimming $2.51 to $240.89 per hundredweight (cwt) and select cuts dropping 13 cents to $222.95 per cwt.
"You had retailers loading up a little bit here, in anticipation of more shutdowns like we saw this spring," said Matt Wiegand, risk management consultant at FuturesOne. "Maybe they're going to be backing off a little bit until they can move some inventory."
CME January feeder cattle ended 0.150 cent higher at 141.800 cents per pound.
Market-ready cattle traded $1 higher in the southern US Plains cash market, reaching $112 per cwt, according to the US Department of Agriculture.
"Cash steer prices are grossly undervalued, compared to the wholesale beef complex," said Smith.
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Source: Reuters
