CME Live Cattle Futures Firm as Packer Margins Turn Positive, Beef Prices Climb

Chicago Mercantile Exchange (CME) Live Cattle Futures Rise on Improving Packer Margins and Beef Prices

On March 12, Chicago Mercantile Exchange (CME) live cattle futures experienced a significant increase, driven by improving packer margins and rising beef prices. This upward trend overshadowed concerns about rising crude oil prices and broader economic uncertainty that may impact beef demand.

Market Analysis

CME April live cattle futures closed at 231.250 cents per pound, up 1.100 cents from the previous day. This increase was attributed to the contract testing technical chart support at its 200-day moving average and overcoming resistance at its 100-day moving average. In contrast, April feeders ended down 0.300 cent at 343.000 cents per pound, due to pressure from higher feed corn costs.

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Beef Market Trends

Beef packers have struggled with poor margins for months, leading some to slow production due to tight cattle supplies and increased costs. As a result, beef prices are rising, and packer margins have turned positive. The average packer margin rose to $20 per head on Thursday, following losses of over $300 per head just two weeks ago, according to HedgersEdge.

Boxed Beef Cutout Value

The choice boxed beef cutout value reached a six-month high, increasing by 39 cents to $397.09 per hundredweight on Thursday, according to the U.S. Department of Agriculture. Select cuts also rose, reaching $390.82 per cwt, the highest since the Covid supply-chain disruptions of 2020.

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Economic Uncertainty

Despite the positive trends in the cattle market, economic uncertainty continues to affect the industry. Rich Nelson, chief strategist with Allendale Inc., noted concerns regarding packer production cuts and the impact of rising fuel costs.

Lean Hog Futures

CME lean hog futures eased on Thursday, with April futures settling down 0.850 cent at 94.350 cents per pound, remaining within a tight recent trading range.