By Benjamin Parkin
Cattle futures were mixed as traders waited for the week's physical cattle trade to start.
The absence of cash trade for slaughter-ready herds this week left market participants with fewer signals to trade with. But some meatpackers on Friday started to raise their bids, offering feedlots $126 per 100 pounds for their animals. That was up from $124, and steady with a week earlier. Feedlots, meanwhile, were asking for prices in the region of $130.
That helped to bolster cattle futures as traders bet that cash prices would ultimately rise, despite weaker beef prices and concerns over the stock market.
Wholesale beef prices fell over $2 to $206.50 per 100 pounds as of Friday morning, adding to losses from Thursday. A snow storm across the Midwest had the potential to dampen beef demand, analysts said, as consumers stayed at home instead of going to grocery stores or restaurants.
In a monthly report, the U.S. Department of Agriculture trimmed its beef production forecast for 2018, a reflection of smaller cattle supplies in the second half of the year, while raising its export forecast. That was broadly supportive to the cattle market, though production is nevertheless expected to rise from 2017.
February-live cattle contracts rose 0.6% to $1.26525 a pound at the Chicago Mercantile Exchange, while later months and feeder cattle futures fell.
Hog futures also fell. CME February lean hog contracts dropped 0.3% to 73.175 cents a pound. Both cash and wholesale pork prices were lower.
Livestock traders were closely watching volatile U.S. equities this week for signs of economic headwinds. Observers say bumper domestic demand will be needed this year to help absorb higher red meat supplies. Economic woes could undermine that.
Major stock indices fell on Friday morning before turning higher.
Write to Benjamin Parkin at [email protected]