Live cattle futures firm as packer margins turn negative - CME

Lean hog futures settle down
calendar icon 12 October 2022
clock icon 2 minute read

Chicago Mercantile Exchange live cattle futures firmed on Tuesday as supplies tighten, with beef packer margins falling into the negative for the first time in years, Reuters reported, citing traders.

Beef packers lost $14.35 per head on Tuesday, compared to earnings of $1.60 a day earlier and $18.40 the week before, according to Denver-based livestock marketing advisory service LLC.

Meatpackers slaughtered an estimated 128,000 cattle on Tuesday, the same pace as a week ago and up from 120,000 cattle a year earlier, according to the US Department of Agriculture.

That beef packer margins have gone into the red "just tells you that the (cattle) numbers are tightening, and the feedlots have the upper hand," said Don Roose, president of Iowa-based US Commodities. "We've been (in) four years of liquidation, so it's time to build the herd."

But cattle future prices were capped by ongoing uncertainty over demand, said Dan Norcini, an independent livestock trader.

"As US consumers become more concerned about rising prices, they tend to look for cheaper prices in the meat counter - and that impacts beef," Norcini said.

Feeder cattle futures rose, bolstered by slumping corn futures, while lean hog futures ended down on profit-taking as investors awaited fresh news to gauge demand levels, traders said.

The CME October live cattle ended the day up 1.100 cents at 145.800 cents per lb and the most-active December contract settled up 1.575 cents at 148.575 cents.

CME November feeder cattle settled up 3.325 cents at 176.200 cents per lb.

The most-active CME December lean hog futures contract settled down 0.075 cent at 79.575 cents per lb. Front-month October hogs slipped 0.725 cent to settle at 93.025 cents per lb.

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