LIVESTOCK-Cattle futures higher on screwworm concerns, tight supply

By Heather Schlitz

CHICAGO, Aug 18 (Reuters) - Chicago Mercantile Exchange cattle futures continued a rally on Monday as traders reckoned with near-record high wholesale beef prices and a tight supply of cattle as calf imports from Mexico remained closed.

The U.S. Department of Agriculture on Friday announced it would spend $750 million to build a facility in Texas that produces sterile flies to fight the flesh-eating livestock pest.

Despite trade expectations that the U.S.-Mexico border would re-open to cattle imports, the plan signals increasing worries about the risk of screwworm, a parasitic fly that eats livestock and wildlife alive, to infest U.S. cattle after the pest moved north in Mexico toward the U.S. border.

"The main point is the border is going to be closed for an undetermined time frame," Rich Nelson, strategist at Allendale, said.

CME October live cattle futures LCV25 ended 0.525 cents higher at 231.175 cents per pound. September feeder cattle FCU25 rose 3.575 cents to 350.925 cents per pound.

Soaring wholesale beef prices kept cattle futures well supported as meatpackers cut back on slaughter rates to help protect margins from further losses.

The choice boxed beef cutout value was up $3.67 on Monday afternoon at $404.24 per hundredweight (cwt), the highest since the early days of the COVID pandemic in May 2020, according to USDA data. The select beef cutout was up $6.38 to $377.14 per cwt.

Lean hog futures also rose as traders awaited a seasonal rise in hog slaughter to begin.

CME October lean hogs LHV25 gained 0.025 cents to settle at 90.125 cents per pound.