By Joanna Newman
THE Chicago April live cattle futures contract for slaughter-ready animals has soared to its highest level in almost a year.
Values had risen to 68.53¢/lb (92.7p/kg) by Tuesday (9 March), compared with 67.7¢/lb a week ago.
This rally reflects a widespread belief that a slight tightening in the supply of slaughter cattle will force up the cash prices paid by packers in coming weeks.
Helped by higher beef values, the packing houses have already shown themselves willing to pay 2¢ more this week for live animals at 65¢/lb, while producers are offering 66-67¢/lb.
Winter storms continue to hamper the cattle trucks in some regions.
However, the March feeder (store) cattle contract, representing lighter animals in the feedlot, has moved lower.
The market settled at 72.68¢/lb (98.3p/kg) on Tuesday (9 March), off from 73.4¢ last week.
The number of head entering the nations feedlots is outpacing slaughter activity and creating a bulge in the supply chain.
Some analysts estimate a hefty 14% year-on-year increase in new feedlot placements during February, to be announced in the next monthly Cattle on Feed report.
This has helped drive feeder cattle prices lower.
The recent 5% rally in maize has also served to depress values for the lighter cattle by increasing the cost of weight-gain for livestock producers.
Historically, feeder cattle prices move inversely to maize.