By Joanna Newman
CATTLE futures prices have soared 3% since the start of the week, jumping to their highest level since last November. Once again, it is Russia that is driving the rally, with rumours resurfacing about planned US donations of beef and pork.
Analysts warn against over-optimism and argue that Russia aid offers little grounds for a sustainable increase in cattle values at home. In recent months, food donations to Russia have been embroiled in political wrangling and scandals which have delayed actual shipments.
Throwing caution to the winds, the Chicago live cattle February futures contract settled on Wednesday (3 February) at 64.4¢/lb (86.2p/kg), up from 62.3¢ at the start of the week.
Domestic supply remains high – last weeks inventory report showed that the national herd shrank by a disappointing 1% to 98.5 million head on 1 January, 1999 from a year ago, a smaller decrease than had been hoped.
Meanwhile, consumption traditionally falls during Lent and this will put pressure on the industry. Indeed, the recent rally in futures has little support from beef prices. The light weight choice-grade beef value was at 95-96¢/lb (around £1.28/kg) on Tuesday, little changed from last week.