Live and feeder cattle futures settled sharply higher Thursday amid fears that cash cattle would trade higher this week when futures already lagged cash, market sources said.
Apr live cattle settled up $3.57 per cwt with Jun up the daily limit of $3.00 at $121.52. Aug, Oct, Dec, Feb and Apr also settled limit up.
Apr feeders ended at $140.85 per cwt, up $1.00, with May through Nov up the daily limit of $4.50.
Trade sources said the talk of higher cash prices helped boost the demand for futures contracts. As news trickled in to traders of rising packer bids in the country, it confirmed fears among bearishly construed traders that futures really were going to rise.
Just how far they can go is a matter of conjecture and something that did not seem to play a role in the way the futures market traded.
BEEF CONTINUES TO ADD SUPPORT
Market sources credited a firm domestic and export beef market this week for a good portion of the underlying support for beef and cattle futures. And it’s true that beef demand has been very good this year so far with a larger percentage of the population back to work.
The USDA’s weekly average boxed beef cutout value for choice 600- to 900-pound carcasses through last week clearly shows a stronger-than-average beef demand. It doesn’t differentiate between domestic and export demand, however.
Over the last six days, the daily choice cutout has risen to Thursday’s $219.15 per cwt from $215.72, with a gain every day except Thursday, for an overall gain of $3.42.
US beef export sales for the week ended April 20 came in at 21,200 tonnes, compared with the prior four-week average of 16,350, trade sources said. Cumulative sales for 2017 were up to 345,500 tonnes, up 24.0% from last year.
Through February, USDA data show beef and beef variety meat export shipments at 186,905 tonnes, about 13% above the 165,504 tonnes for the same period in 2016.
FEEDERS STRONG FOR A REASON
Feeder cattle prices continue to climb as cattle feeders are making very wide margins at current price spreads.
For the week ended April 21, unhedged cattle feeding margins were estimated at an average $473.95 a head, according to Sterling Marketing Inc.’s Beef Profit Tracker. These are huge margins and compare with a positive $14.57 in the same week a year ago.
The average weekly price of medium and large No. 1, 500- to 600-pound Southern Plains feeder cattle rising seasonally and even continuing past the seasonal downturn and well past last year’s turn lower.
With such profits, feedlots are likely to keep bidding feeder cattle higher, market sources said. And they remain well below the 2011-2015 average.