U.S. live cattle futures firmed late Friday on short-covering and positioning before the U.S. Department of Agriculture’s monthly cattle-on-feed report at 2 p.m. CST.
Analysts expected the data to show the number of cattle placed in feedlots in November fell for a sixth straight month.
Friday’s wholesale beef price rebound helped lift Chicago Mercantile Exchange live cattle from morning lows. But fallout over failed budget talks in Washington at times kept futures on the defensive.
"It’s the whole knife fight between this economy and the bullish cattle supply fundamentals," said Archer Financial analyst Dennis Smith.
On Friday, CME live cattle spot December closed 0.325 cent per pound higher at 129.275 cents. Most actively traded February ended at 133.575 cents, up 0.075 cent (all figures US$).
Live cattle futures ended up about 1.8 per cent for the week.
The market drew added support from wintry weather that crossed the U.S. Plains on Thursday and early Friday. The storm dumped several inches of snow in parts of the region, which slowed the movement of livestock to packing plants.
Areas of heavy snowfall in the northwestern Midwest and tight supplies in the southern Plains forced packers to spend more for cattle, wearing down their margins.
Processors also bought animals to replenish inventories during the Christmas and New Year holiday-shortened workweeks.
Cash cattle in the Plains fetched $126-$126.50 per hundredweight (cwt), compared with $124-$124.50 last week.
USDA’s wholesale choice beef price Friday morning was $192.06/cwt, $1.16 higher than Thursday; the select price was $177.22, up 52 cents.
HedgersEdge.com put the average beef packer margin for Friday at a negative $53.55 per head, compared with a negative $44.50 on Thursday and a negative $29.38 on Dec. 14.
CME feeder cattle futures were weaker on USDA pre-report caution and firm corn prices.
Futures finished down slightly for the week.
Feeder cattle January closed down 0.125 cent/lb. to 152.15 cents. March was off 0.075 cents to 154.775 cents.
Hogs recover late as shorts cover
CME hogs settled higher following a late burst of short-covering ahead of what for some will be a long Christmas holiday weekend, a trader said.
Hog futures rose almost 6 percent for the week, their biggest weekly percentage gain since June 3.
On Friday, February and April hog futures settled 0.45 cent/lb. higher at 86.9 and 91.625 cents, respectively.
Futures advanced despite sentiment that cash hog prices may trend lower next week as packers cut cash bids to realign their margins.
And back-to-back holiday disruptions could reduce packer need for supplies over the next two weeks.
The average pork packer margin for Friday was a negative $3.75 per head, compared with a negative $2.10 on Thursday and a positive $3.93 on Dec. 14, according to HedgersEdge.com
USDA Friday morning showed the average price for hogs in the western Midwest direct market at $78.72/cwt, down $3.01 from Thursday.
Others believe hogs become less available after the holidays as colder temperatures slow weight gains in animals.
Also, hog farmers culled breeding herds after historic drought last summer shot feed costs to record highs, resulting in fewer hogs now and through the coming year.
At least three Iowa hog processing plants idled by the winter storm in the Plains will make up the downtime on Saturday.
USDA estimated Saturday’s slaughter at 305,000 head, up 150,000 from week earlier.
— Theopolis Waters writes for Reuters from Chicago.