CME Cattle Futures Jump on Hopes for US Beef Demand

CME Cattle Futures Jump on Hopes for US Beef Demand

Chicago Mercantile Exchange live cattle and feeder cattle futures climbed on Wednesday as concerns eased about the risk for high prices to hurt demand for U.S. beef, analysts said.

Why Prices Rallied

Prices rallied after falling more than 3% last week and setting their lowest levels since March on Friday. Live cattle futures set a record high for the front-month contract last month as consumer demand has stayed strong for beef, while the U.S. cattle herd has dwindled to its smallest size in 75 years.

Energy Prices and Demand

Oil prices were about 4% lower on Wednesday after reports of a potential Iran-U.S. agreement. 'If it looks like energy prices might be heading lower, coupled with record-high stock market levels, it takes away some of the concerns about consumer demand for beef falling,' said Dan Norcini, an independent livestock trader.

Market Data

August live cattle jumped 3.35 cents to finish at 242.500 cents per pound, while August feeder cattle futures soared 5.175 cents to 354.625 cents per pound. For boxed beef, the USDA reported that values for choice cuts rose by $2.63 to $392.90 per hundredweight on Tuesday, while select cuts increased by $5.30 to $390.30 per hundredweight.

Meatpackers and Hog Market

Despite lofty prices for beef, meatpackers remained under pressure from high costs for scarce supplies of cattle. Packers were losing about $299 for each head of cattle they slaughtered on Wednesday. In CME's lean hog market, July futures advanced 2 cents to 102.125 cents per pound. 'Hogs look to me like they are trying to forge a bottom,' Norcini said.