CHICAGO, May 7 (Reuters) - Chicago Mercantile Exchange cattle futures rose on Friday on strong beef prices and demand for red meat that also catapulted margins for beef processors.
Meat demand is high as federal stimulus checks have increased incomes and prompted consumers to spend more at supermarkets and restaurants, analysts said. COVID-19 vaccinations are also prompting people to eat out more, they said.
Prices for select cuts of beef shipped to wholesale buyers in large boxes increased by $0.91 to $209.27 per cwt, according to the U.S. Department of Agriculture. Prices for choice cuts eased by $0.49 to $305.88 per cwt after climbing recently.
“People want to pay up for steaks,” said Ted Seifried, chief ag market strategist at The Zaner Ag Hedge Group. “People want beef.”
CME June live cattle futures ended up 0.550 cent at 116.025 cents per pound and touched their highest price since April 21. The contract recovered slightly after sliding 10% from April 8 to May 4.
August feeder cattle futures finished 0.875 cent higher at 144.275 cents per pound. It also suffered a 10% slide over the past month.
With demand strong, margins for beef packers reached $732.80 per head, up from $651.10 a week ago, according to livestock marketing advisory service HedgersEdge.com.
Feedlot operators are angry they are missing out on such huge profits, brokers said, as feeders’ margins are being hurt by soaring costs for grains used for feed.
“A big problem in the market is the packers have too big a margin,” said Don Roose, president of Iowa-based commodities brokerage U.S. Commodities.
Starting June 1, CME will raise the daily trading limit for feeder cattle futures to 6.25 cents per pound from 5 cents, according to the exchange. The live cattle limit will increase to 5 cents from 4 cents.
In the pork market, CME most-active June lean hogs fell 1.625 cents to 112.850 cents per pound in a retreat from recent rallies.
Reporting by Tom Polansek in Chicago; editing by Diane Craft
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