The most-active April hog markets closed the day with gains, while Chicago Mercantile Exchange (CME) live cattle futures continued their upward trajectory for the fifth consecutive trading day on Tuesday. Feeder cattle futures also saw an increase, driven by strength in the cash market, as reported by Reuters and industry analysts.
The most-active CME April live cattle contract closed up 3.450 cents at 207.275 cents per pound, reaching fresh lifetime highs along with all other live cattle contracts. Similarly, CME March feeder cattle settled up 3 cents at 278.250 cents per pound, with several other contracts also hitting lifetime highs.
The ongoing rally in cattle futures was attributed to a strong cash cattle trade, according to Matthew Wiegand of FuturesOne. Packers are facing challenges in finding cattle inventory for slaughter operations, as beef demand from consumers remains robust. Despite the high prices being paid by packers for cattle, tight US cattle supplies are expected to persist in the near future.
The absence of cattle imports from Mexico following the US decision to block shipments in November due to the discovery of the New World screwworm pest has further exacerbated the supply issue, as noted by Wiegand. Beef packer margins were reported to be deep in the red on Tuesday, with losses of $112.55 per head of cattle, compared to previous figures.
Wholesale beef prices experienced an uptick on Tuesday, providing additional support to cattle futures. Choice cuts of boxed beef rose to $332.45 per hundredweight (cwt), while select cuts reached $321.96 per cwt, as reported by the US Department of Agriculture (USDA).
In the hog market, the most-active CME April hogs closed the day up 1.025 cents at 90.900 cents per pound. Despite wholesale pork carcasses experiencing a decline, pork bellies saw an increase on Tuesday afternoon, according to USDA data. Pork carcasses lost $0.30 per cwt, while pork bellies gained $4.35 to $146.10 per cwt.
Overall, the livestock market demonstrated resilience and volatility, with cattle futures continuing their upward momentum supported by strong cash cattle trade and robust beef demand. The challenges posed by tight cattle supplies and import restrictions have contributed to the current market dynamics. In contrast, the hog market saw gains despite fluctuations in wholesale pork prices, indicating ongoing market activity and investor interest.
The livestock market is expected to remain dynamic in the coming days, influenced by various factors such as supply chain disruptions, consumer demand, and global trade dynamics. Market participants will continue to monitor developments closely to navigate the evolving landscape and make informed decisions in response to changing market conditions.
