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CME update: live cattle futures fell as corn prices skyrocket, ratcheting up feed costs

31 December 2020

US live cattle futures sank on 30 December for a second straight session as surging corn prices signalled rising feed costs and pressured feeder cattle futures.

Reuters reports that Chicago Mercantile Exchange (CME) February live cattle futures settled down 0.125 cent at 114.450 cents per pound, while CME March feeder cattle tumbled 1.475 cents to close at 139.750 cents per pound.

Feeders fell as benchmark Chicago Board of Trade corn futures touched a 6-1/2 year high at $4.76 a bushel after Argentina, the world's third-largest corn supplier, moved to restrict exports of the grain.

Higher feed costs cut into feedlots' profit margins, making feeder cattle less attractive.

However, signs of strength in the cash cattle market and in wholesale beef prices underpinned futures. The choice boxed beef cut-out rose 23 cents on 30 December to $210.53 per cwt, according to the US Agriculture Department. Select cuts rose $4.38 to $199.86 per cwt.

"Boxed beef looks like it has bottomed," said Don Roose, president of Iowa-based US Commodities.

Some brokers expect meat packers to bid more aggressively for cattle and hogs this week as they resume full operations after interruptions for last week's Christmas holiday and New Year's Day on Friday.

"We've had two short kill weeks. Next week, the packer is gearing up for a full week. That's supportive for the cash markets," Roose said.

The USDA said market-ready cattle traded lightly in the southern Plains cash market at $111 per cwt, up $1 from the bulk of last week's trade. Some feedlots are hoping for $112 per cwt, Roose said.

Winter storms expected in the southern Plains Thursday and Friday could slow the movement of livestock but traders appeared to have factored that risk into the market already.

Read more about this story here.

Source: Reuters



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