Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished sharply higher on Tuesday, driven by fund buying and brisk wholesale beef demand, said traders.

They said deferred-month contracts’ discounts to this week’s expected cash prices provided additional market support.

February live cattle, which expired at noon CT, closed 1.225 cents/lb. higher at 126.6 cents (all figures US$).

Most actively traded April ended 2.425 cents higher at 117.925 cents, after breaking through the 40-day moving average of 115.998 cents.

KIS Futures vice-president Lane Broadbent called Tuesday’s market rally a “perfect storm” of technical buying, good beef demand, April futures’ discount and possibly higher cash prices this week.

The morning’s choice wholesale beef price rose $2.64/cwt to $204.12 from Monday. Select cuts jumped $3.69, to $200.77, the U.S. Department of Agriculture said.

Despite more cattle for sale than last week, packers might raise bids for supplies given their improved margins and continued tight cattle numbers, said analysts and traders.

Last week packers paid $124 to $125/cwt for slaughter-ready, or cash, cattle.

Investors await Wednesday morning’s sale of 4,800 animals at the Fed Cattle Exchange that a week ago yielded $122/cwt average prices.

Tuesday’s average beef packer margins were at a negative $19 per head, up from negative $20.20 on Monday, as calculated by HedgersEdge.com.

CME feeder cattle closed higher on fund buying and live cattle futures gains.

March feeders closed 1.225 cents/lb. higher at 125.075 cents.

Hog futures end weaker

Profit-taking led by downward-trending cash prices pressured CME lean hogs, said traders.

April hogs ended 0.525 cent/lb. lower at 67.6 cents, and May closed down 0.075 cent, to 73.95 cents.

Tuesday morning’s cash hog price in Iowa/Minnesota averaged $70.8/cwt in light sales volume, 82 cents lower than on Monday, USDA said.

“There’s plenty (hogs) for what packers want to process,” a Midwest hog dealer said.

Market participants are tracking wholesale meat prices as moderating temperatures in parts of the country prompt outdoor barbecues.

“I think our weather is dictating that we’re going to start this grilling season a little bit earlier,” said Broadbent.

U.S. government data on Tuesday morning showed the average wholesale pork price up 26 cents/cwt to $80.71 from Monday, led by firmer prices for all categories listed except loins.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.