Live cattle futures set record high

From Staff Reports

September 11, 2003 -- Boosted by persistent strength in cash prices, the August live cattle contract set an all-time high on Aug. 28 for any live cattle contract when it traded at $84.90 on the Chicago Mercantile Exchange, reports Texas Cattle Feeders Association.

Just the day before, on Aug. 27, the price of live cattle reached a 10-year high when Panhandle buyers paid 85 cents a pound for benchmark 1,000- to 1,250-pound steers ready for slaughter.

"We may have set records in the futures market, but not the cash market and that is what I am aiming for," said one feedyard manager about the week's trading.

Commenting on the Aug. 28 live cattle contract price, TCFA's Market Director Jim Gill said, "The previous high was set in March 1993 when the April contract reached $84.30. March of 1993 also set the record live price ever reported to TCFA when more than 500 heifers traded at $85.50. There were also more than 16,000 head traded at $85 and more than 84,000 from $84 to $84.50 that March."

The August feeder cattle contract also set a record high on Aug. 28 at $97.18 before it expired at noon. After the contract highs were set, profit taking set in and the futures market closed mostly lower on the day.

During the first week of September, cattle feeders sent to slaughter all the near market-ready cattle they could and received record to near-record high prices for them, reported livestock market analyst Chuck Levitt with Alaron Futures and Options Trading.

"We're not out of cattle, but it's very tight," Gill told the Fort Worth Star Telegram. He also noted that three years of low prices have prompted many ranchers to scale back operations, leading to the current situation.

Gill added this is one of the few times that all four main sectors of the industry - packers, feeders, producers, and cow-calf operators - were making money.

In related information, Levitt commented on Sept. 5 he was watching for the chance that the futures market "could stub its toe temporarily" as traders react to the fact that Canadian and U.S. officials have reached an agreement on the protocols that will enable beef from Canada to enter the United States beginning the week of Sept. 15.

On the export side of the matter, TCFA reported U.S. beef exports broke a record in June, with the largest single-month volume ever recorded. USDA statistics indicate U.S. beef muscle exports worldwide hit 86,836 metric tons (mt), exceeding the previous monthly high of 81,546 mt exported in August 2002.

June's record volume of beef exports was valued at $320.1 million, according to the U.S. Meat Export Federation.

U.S. beef exports represent 12.4 percent of all U.S. beef production.