U.S. live cattle futures settled steady to firm on Tuesday, supported by an upswing in wholesale beef prices and fund buying, analysts and traders said.
Hog futures rose slightly and feeder cattle at the Chicago Mercantile Exchange ended firmer.
CME live cattle drew support from the rebound in wholesale beef prices as some grocers restocked meat cases for post-Labour Day beef features, a trader said.
Others contended that wholesale prices rose because packers were trying to counter higher prices for cattle in recent weeks that, along with sluggish beef demand, eroded their margins.
HedgersEdge.com pegged Tuesday’s average beef packer margin at a positive $12 per head, compared with a positive $25.65 on Aug. 28 (all figures US$).
The U.S. Department of Agriculture on Tuesday estimated the choice wholesale beef price at $190.45 per hundredweight (cwt), up 83 cents from Friday. Select cuts jumped $1.23 to $180.69 cents.
Cash cattle in the U.S. Plains last week moved at $123/cwt, $2 to $3 higher than the week before. Fed cattle in Nebraska mostly traded from $121 to $121.50, steady to up $2 from the prior week.
October live cattle ended unchanged at 126.175 cents.
December closed up 0.225 cent to 128.875 cents. Funds purchased contracts when the price broke above the 200-day moving average of 128.59 cents.
Feeder cattle futures followed the higher live cattle market despite rising corn prices that lift costs for cattle feedyards.
September ended 0.4 cent higher at 145 cents. October closed up 0.275 cent at 146.95.
Hogs up slightly
CME hogs ended moderately higher as speculative buyers banked on the prospect of tighter hog numbers later this year, an analyst said.
However, packers on Tuesday lowered bids for hogs in the cash market for a sixth straight day amid plentiful supplies and sluggish wholesale pork demand, which limited market gains.
October hogs closed up 0.025 cent to 74.2 cents/lb. December finished up 0.05 cent to 72.45 cents.
Hogs on average in the Iowa/southern Minnesota market were priced at $70.75 per cwt, according to USDA, $1.44 lower than Friday and down $4.96 from last week.
The price for pork at wholesale fell 85 cents/cwt from Friday to $80.63, said USDA.
Packers on Tuesday processed an estimated 435,000 hogs, up 4,000 from last week and 9,000 more than for the same period a year ago.
Hog farmers moved hogs ahead of schedule after a break from hot weather in July allowed the animals to gain weight more quickly. Some hurried hogs to market as drought in the Midwest pushed feed costs to all-time highs.
— Theopolis Waters writes for Reuters from Chicago.