Finished cattle futures soar in Chicago

By Joanna Newman

FUTURES prices for live (finished) cattle in Chicago have soared, with the August contract gaining about 2¢ on the week to 65.7¢/lb (91p/kg) on Friday, 23 July.

The live cattle market is responding in part to the latest monthly Cattle on Feed report, which showed an encouragingly high slaughter rate in June, up 5% year-on-year at 2.1 million head.

Packers are enjoying good margins currently, raising expectations that they will be willing to start paying up for fat cattle.

Cash sales to the packing houses are stable at 63-65¢/lb (87-90p/kg), but cattle producers are attempting to push through higher prices.

Meanwhile good retail beef demand is encouraging packer activity and this in turn is stimulating demand in the live cattle market.

Reports that the US Department of Agriculture plans to ship 24,000 tonnes of beef to Russia is also lending support to the US market.

Feeder (store) cattle futures, representing lighter animals, have seen their values held back by the sharp rally in maize this week and some damage to pasture due to hot, dry weather.

Feeder cattle tend to trade in an inverse relation to their cost of gain. The Chicago August feeder cattle contract closed on Friday, 23 July at 76.8¢/lb (106p/kg), little changed from a week ago.