Chicago Mercantile Exchange (CME) live cattle futures rose to life-of-contract highs on Tuesday as tight supplies, firm cash cattle markets and resilient consumer beef demand continued to lend support, Reuters reported, citing brokers.
CME August live cattle futures settled up 1.850 cents at 229.725 cents per pound after posting a contract-high of 229.900 cents, which was also the highest-ever price on a continuous chart of the front cattle futures contract.
Most-active October cattle ended up 1.675 cents at 226.450 cents after reaching 226.600 cents.
CME feeder cattle futures set contract-highs across the board, with benchmark September settling up 2.525 cents at 337.075 cents per pound after reaching 337.575 cents.
Traders continue to digest government reports detailing scarce supplies of market-ready cattle after years of drought prompted ranchers to cull their herds.
The US Department of Agriculture (USDA) on Friday confirmed that the US cattle herd fell to 94.2 million head as of July 1, a record low for that date, while the number of cattle placed in US feedlots during June fell by 8% compared to a year earlier, a bigger-than-expected drop.
"There are just not enough cattle running around right now, and that is going to be the story for quite some time," said Dan Norcini, an independent trader.
"Open interest (in CME cattle futures) is increasing, and it tells me that the funds are piling back into cattle on the long side."
Wholesale beef prices cooled on Tuesday, with choice cuts priced at $364.19 per hundredweight (cwt), down $3.54 from Monday. Still, given that meat prices tend to decline in late summer, "beef demand seems to be holding up fairly well for this time of year," Norcini said.
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