Chicago Mercantile Exchange (CME) live cattle futures experienced a significant surge on Thursday, driven by an increase in cash cattle prices and a report from the U.S. Department of Agriculture (USDA) confirming a 73-year low in the total number of U.S. cattle. The CME April live cattle futures settled up 2.475 cents at 183.175 cents per pound, approaching the 2-1/2-month high of 183.450 cents seen on Monday. Meanwhile, the March feeder cattle futures rose 4.725 cents, closing at 244.875 cents per pound after reaching a three-month peak of 245.6 cents.
According to the USDA’s stock report released on Wednesday, as of January 1, the total number of U.S. cattle stood at 87.2 million head, marking a 2% decrease from the previous year and reaching its lowest level since 1951. This decline can be attributed to ranchers reducing their herds due to a multi-year drought in the western U.S., which limited grazing land availability and increased feeding expenses.
Don Roose, the president of U.S. Commodities based in Iowa, noted that the tightening of cattle numbers is expected to continue in the future. While some areas have seen an improvement in moisture, suggesting the possibility of cow-calf operations rebuilding their herds, Roose stated that there are no current signs of such recovery.
The rally in cattle futures gained further momentum as market-ready cattle in the Texas and Kansas cash markets traded around $178 per hundredweight (cwt), representing a $3 increase from the majority of last week’s trades. This price hike is attributed to the impact of severe winter weather conditions in mid-January, which caused reductions in cattle weights.
Meanwhile, wholesale beef prices showed mixed results. Choice cuts were priced at $294.94 per cwt, marking a 40-cent increase from Wednesday, while select cuts fell by 92 cents to reach $283.25 per cwt, according to USDA data.
In contrast, CME hog futures experienced a decline due to profit-taking after the benchmark April contract reached a four-month high earlier in the week. The April hogs closed down 1.075 cents at 83.750 cents per pound.
On another note, the CME’s Lean Hog Index, which reflects a two-day weighted average of cash prices, reached its highest reading since November 23, standing at 72.38 cents per pound.
The USDA’s pricing of the pork carcass cutout late Thursday was $88.59 per cwt, representing a $1.03 increase from Wednesday.
In terms of exports, the USDA reported that U.S. pork sales for the week ending January 25 reached 42,900 metric tons, while beef sales totaled 16,700 tons.
These developments in the livestock market highlight the impact of various factors such as weather conditions, inventory levels, and the ongoing challenges faced by ranchers. As the industry navigates these challenges, market participants will closely monitor future indicators to gauge potential shifts and opportunities in the livestock market.
