Cattle futures bounced after physical cattle prices rose late last week.
Meatpackers and feedyards spent much of last week in a deadlock over slaughter-ready cattle prices, leaving futures traders short of supply-and-demand signals to follow. Late on Friday, however, packers started to buy cattle for $123 per 100 pounds on a live basis and $195 on a dressed basis, several dollars higher than the previous week's average.
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Analysts said that packers were at risk of being left shorthanded, forcing them to raise their bids late in the week. Much of the trade happened after futures markets had closed for the week, prompting a bounce when they reopened on Monday.
February-dated live cattle futures rose 1.4% to $1.2355 a pound at the Chicago Mercantile Exchange. Wholesale beef prices slid on Friday and again on Monday, however.
The market had likely hit a seasonal top, said research firm AgResource Co. in a note to clients, peaking for the first quarter. Prices ended last week at $204.86 per 100 pounds, down over $3 from a week earlier.
Hog futures were lower on Monday. The front-month CME February lean hog contract fell 0.4% to 71.8 cents a pound, weighed down by a steady-to-lower outlook for cash hog prices.
A snowstorm that blanketed parts of northern livestock country disrupted market for both cattle and hogs. A number of hog slaughterhouses closed, observers said, and livestock truckers were having difficulty transporting animals to packers.
The freezing conditions could also restrict supply by slowing the rate at which livestock fatten. That could push cash cattle prices higher yet this week despite large herd sizes, said Don Roose, president of U.S. Commodities."There's truly no shortage of cattle, but we got hit with the storm so it set the cattle back," Mr. Roose said.
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(END) Dow Jones Newswires
January 22, 2018 15:09 ET (20:09 GMT)