Live and feeder cattle futures on the Chicago Mercantile Exchange (CME) surged to fresh contract highs Tuesday, propelled by strong cash markets and limited beef supplies ahead of the U.S. grilling season, Reuters reported, citing market analysts.
June live cattle futures rose 0.600 cent to settle at 210.200 cents per pound, while August feeder cattle climbed 1.95 cents to close at 296.900 cents per pound.
The rally reflects continued strength in the cash cattle market, where offers are expected to rise further this week and possibly into next, according to Don Roose, president of Iowa-based U.S. Commodities. “Cash cattle prices are leading the market, and we’re seeing the futures follow that momentum,” he said.
The surge comes amid shrinking cattle inventories, as U.S. producers downsized herds during a prolonged drought that reduced grazing pasture availability. The resulting supply squeeze has forced beef processors to bid more aggressively for slaughter cattle, particularly with peak grilling season approaching.
In the wholesale beef market, choice boxed beef prices jumped $3.42 to $346.19 per hundredweight (cwt) on Tuesday morning, according to the U.S. Department of Agriculture. Select cuts dipped slightly, down 31 cents to $324.81 per cwt.
Despite rising beef prices, processors are facing significant losses. Marketing advisory firm HedgersEdge.com estimated a loss of $100.05 per head of cattle processed on Tuesday. “The air is getting pretty thin up there, so it’s going to be a question of who is going to keep buying beef at these prices,” Roose added.
Meanwhile, CME lean hog futures continued to decline for a second straight session, pressured by a wave of spread trading that saw traders shift out of hogs and into cattle. June lean hog futures dropped 1.55 cents to 99.45 cents per pound.
“Futures are still priced well above current cash hog values, so there’s only so much upside without a corresponding move in cash prices,” Roose said.
