US cattle prices see unseasonal lift

By Joanna Newman

BEEF and live cattle prices have firmed up over the past few days since the Memorial Day weekend, and this in turn has helped drive a strong increase in futures contracts for live and feeder cattle.

Usually beef prices ease off after the holiday weekend in May as consumer demand eases.

However, this year the market has held up thanks to good retail activity. The composite of boxed beef cutout values for light-weight (600-750 pound) Choice grade carcasses is at around 113 cents/lb, compared with the 111 cent level in late May.

Thanks to higher margins, packing houses have proved willing to pay up for live cattle.

Significantly, slaughter weights have become lighter in recent weeks. The higher portion of so-called green cattle in the slaughter mix is widely seen as extremely bullish for livestock producers.

If packers are prepared to accept lighter fed cattle, this suggests a tightening of supply out of the feedlots.

As a result, the Chicago August feeder cattle contract (representing younger beef cattle entering the feedlots) has soared to 77.5 cents/lb on Tuesday, 8 June, up from 75.9 cents a week earlier.

Live cattle futures have also surged, with the Chicago June contract gaining a couple of cents on the week to 66.4 cents/lb.

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