* Snowstorm snarls transportation, cutting weight gains
* Fewer and lower weight cattle coming to market
* Gains restrained as Friday's budget cuts loom
* Most hog contracts up on bargain buying
By Sam Nelson
CHICAGO, Feb 26 Chicago Mercantile Exchange
(CME) live cattle futures were higher on Tuesday with a major
snowstorm slamming into the U.S. Plains cattle feeding states,
slashing fed cattle weights and slowing livestock movement,
analysts and traders said.
"This is the second big storm in five days so there is no
doubt we are taking some serious weight, some serious beef
tonnage off the market," said Don Roose, president of U.S.
Commodities, in Des Moines, Iowa.
"We've had an oversupply coming on and now I think the
number of cattle coming to market will be coming down and
weights will be coming down," Roose said.
CME February live cattle were up 0.325 cent per lb
at 127.275 cents per lb and April was up 0.875 cent at
129.300 cents per lb.
Feeder cattle turned up in line with the gains in cattle but
gains were slowed by an upturn in the Chicago Board of Trade
(CBOT) corn market. CME March feeder cattle were up
0.375 cent per lb at 141.175 cents per lb and April up
0.325 cent at 144.025 cents per lb. At 1:12 p.m. CST (1912 GMT),
CBOT March corn was up 9 cents per bushel at $7.02-1/2
Gains in cattle futures were restrained on a lack of bullish
enthusiasm or momentum even though a government official said
the Obama administration may institute a "rolling" furlough to
keep meat plants open during automatic budget cuts rather than
idle all 8,400 U.S. meat inspectors at the same time.
"It's just another uncertainty in the market and markets
never like uncertainty. It's keeping some people away from the
market that could be potential bullish buyers," said Dennis
Smith, a broker for Archer Financial.
Although the spending cuts are due to take effect on Friday,
it could be weeks or months before the meat industry is directly
affected. The U.S. Department of Agriculture has not specified a
date when furloughs would begin, but says they are unavoidable.
The snowstorm not only was cutting into livestock weights
but slowed processing of meat in the U.S. Plains and Midwest.
Packers on Monday processed 87,000 head of cattle, down
22,000 from a week earlier and 33,000 less than a year ago
during the same period, based on USDA data.
Heavy snowfall covered nearly all of the U.S. Plains on
Tuesday, adding valuable moisture for the drought-stricken wheat
and pasture grazing lands while snarling transportation and
hampering cattle feeding and calving, an agricultural
"I think talk of how severe this storm is has brought in
some buying along with a little better beef market. Wholesale
beef is not sharply higher but it's up nicely," Smith said.
U.S. beef packer margins on Tuesday were a negative 46.25,
versus a negative 42.25 on Monday and a negative 69.55 a week
Deliveries on the February contract, which is set to expire
on Feb. 28, totaled 21 contracts. CME data showed R.J. O'Brien
issued 8, ADM Investor Services issued 13 and Rosenthal Collins
Group stopped the deliveries.
APRIL HOGS SAG, OTHERS RISE ON BARGAIN BUYING
Most CME lean hog futures contracts were up on bargain
buying after the spot contract fell to its lowest level
in three months on Monday, reaching a session low of 81.650
cents per lb. Spot April eased slightly again on Tuesday
on bear spreading, buying the back months and selling April.
Hog futures have been falling as the market attempted to
find fair value, traders said.
CME April lean hogs were down 0.325 cent per lb at
81.575 cents per lb and May was up 0.700 cents per lb at
89.500 cents per lb.
"Hogs are still searching for a bottom. It may be in but
there is no strong technical signal," Smith said.
The April contract's discount to CME's lean hog index at
82.63 cents may be attracting speculative buyers but there was a
notable lack of bullish momentum in the market. Last Friday,
April closed at 81.650 cents per lb.
Cash hogs around the U.S. Midwest traded steady to $1 per
cwt lower on Tuesday, as packers showed little need for supply,
U.S. pork packer margins on Tuesday were a positive 6.65,
versus a positive 5.45 on Monday and a negative 10.00 a week
ago, according to Hedgersedge.
The CME lean hog index for the two days ending Feb. 22 is
82.63 and for the two days ending Feb. 21 is 83.78.