By Michael Hirtzer
CHICAGO, March 22 U.S. live cattle futures
surged to the highest levels in 14 months on Wednesday,
lifted by investment fund buying and steep gains at a weekly
online cash cattle auction, traders and analysts said.
Chicago Mercantile Exchange feeder cattle rose by as
much as 3 percent while lean hogs were mostly lower.
CME April live cattle futures settled 2.550 cents
higher at 122.450 cents per pound, notching their biggest daily
gains in two months. Most-active June cattle futures
finished 2.725 cents higher at 113.775 cents.
Sales at the weekly Fed Cattle Exchange auction averaged
$133.35 per cwt, up from $128.40 per cwt last week, according to
the auction website.
Beef packers were aggressively buying cattle to capitalize
on elevated wholesale meat prices that boosted their profits.
"The $35 rally in boxed beef has a lot to do with it,"
analyst Ken Morrison, publisher of Morrison on the Markets, said
of the gains in cattle futures.
The U.S. Department of Agriculture after the close of
futures trading said choice-grade wholesale beef eased $1.93 to
$223.00 per cwt. Prices have soared since reaching a multimonth
low of $187.63 in mid-February.
Open interest in live cattle contracts jumped 4,454
contracts to 367,767 contracts during Tuesday's session of
higher prices, suggesting investors were making new bullish
bets, CME Group data showed on Wednesday. That is the most
cattle futures contracts in about three years.
Analysts said cattle have climbed this week in part on
speculative tied to the Brazilian meat scandal, in which several
buyers including China have halted imports of Brazilian meat
amid an investigation into allegations of unsanitary conditions
and corrupt practices.
However, many U.S. beef cuts were more expensive than
Brazilian meat, limiting the potential for substitutes of U.S.
supplies in global markets, Morrison said.
"With very few exceptions, there's no correlation. It's like
trying to sell a Volkswagen to a Cadillac driver," Morrison
USDA in a monthly cold storage report said there were 502.43
million pounds of beef and 571.966 million pounds of pork in
U.S. cold storage, compared to respective analyst estimates of
521.7 million pounds and 545.9 million pounds.
CME April feeder cattle futures settled 3.725 cents
higher at 136.350 cents per pound.
CME April lean hogs were up 0.150 cents to 68.150
cents per pound. Most other deferred contracts lost ground, with
most-active June hogs easing 0.575 cent to 75.750 cents.
(Reporting by Michael Hirtzer; Editing by Andrew Hay)