Chicago | Reuters — U.S. live cattle futures rebounded from early-session weakness on Tuesday to close higher for the fifth time in six trading sessions on expectations for firm cash cattle prices this week.
Feeder cattle futures also climbed, drawing some support from sharply lower corn prices, while lean hogs ended mixed.
Cattle futures markets opened lower on Tuesday after the three-day Fourth of July holiday weekend as a firm dollar and concerns about the global economy pressured commodities in general. But prices turned higher at midmorning as selling pressure faded and traders turned their focus to firm cash markets.
“We had some cash optimism sparked here again,” said Domenic Varricchio, analyst at brokerage Schwieterman Inc. “They ran the market down early, ran through some stops and then they bought the dip.”
Cash cattle in the southern U.S. Plains traded late last week at $122/cwt on average, up $6 from the prior week and a sizeable premium to current futures prices (all figures US$).
Some analysts and traders expect steady to higher cash prices again this week as beef packers will be buying for a full week’s slaughter next week and packer margins remain profitable.
CME August live cattle settled 0.675 cent higher at 113.75 cents/lb., rebounding from an earlier one-week low.
Feeder cattle for August delivery finished 1.625 cents higher at 144.075 cents/lb. Corn prices have fallen more than 10 per cent over a four-session slump, which has reduced costs for fattening cattle.
Lean hogs were mixed, with nearby months lower on seasonal pressure following the Fourth of July holiday, while some deferred-month contracts climbed.
Recent mild weather in the central U.S. has helped to boost weight gain rates at Midwest hog farms before hotter temperatures are expected to arrive this week, analysts said.
“We’re taking some of the heat premium out of the market,” said Don Roose, president of U.S. Commodities.
August hog futures, the most active contract, fell 0.7 cent to 83.25 cents/lb.
— Reporting for Reuters by Karl Plume in Chicago.