US cattle rally runs out of steam

By Joanna Newman

THE recent rally in cattle prices, fuelled by excitement over food-aid to Russia, has run out of steam over the past few days.

The Chicago April live cattle contract for market-ready animals approached 69¢/lb (94p/kg) last week, its highest level since last summer.

However, the contract subsequently retreated to settle on Tuesday (2 March) at 67.7¢/lb.

Given the slow pace of Russian aid in the past, the market has discounted rumours that the shipments will start this month, and most commentators do not now expect any beef to move to Russia until April.

The US government plans to provide US$260 million-worth (£161m) of beef, to be shipped over five or six months.

Domestic deliveries to slaughterhouses have been hindered by winter storms, but this has not affected cash prices.

Packers are bidding 63¢/lb (86p/kg) for live animals, little changed from a week ago.

Weakness in boxed beef prices is depressing margins, causing reluctance to pay up for live cattle.

The rebound in grain prices over the past couple of days has raised the cost of weight-gain for store cattle producers and contributed to the decline in livestock values.

Traditionally, store cattle prices move in an inverse relationship to maize.

The Chicago March store cattle contract closed on Tuesday (2 March) at 73.4¢/lb (100p/kg), down from around 75.5¢ a week ago.