U.S. live cattle futures climbed more than one per cent on Wednesday, boosted by fund buying and short-covering, said analysts and traders.
Chicago Mercantile Exchange (CME) feeder cattle and hogs gained modestly.
Live cattle futures surged after breaking through key technical resistance levels, triggering fund buying.
"It was more technical than anything else, with chart signals turning positive toward the end of the month," said Don Roose, president of U.S. Commodities.
Traders who were short the market also covered their positions, with some leaving early to begin Labour Day vacations, he said.
Spot August live cattle, which will expire on Friday, closed up 0.575 cent per pound, or 0.48 percent, to 119.4 cents. It earlier broke through the 40- and 10-day moving averages of 119.38 and 119.96 cents (all figures US$).
Most-actively traded October ended at 125.5 cents, up 1.75 cents, or 1.41 per cent. It broke past the 40-day moving average of 124.12 cents before settling above the 20-day at 125.12 cents.
Futures climbed despite tepid wholesale beef demand after supermarkets have bought what they need for Labour Day grilling specials.
The U.S. Department of Agriculture on Wednesday morning estimated the choice wholesale beef price at $191.60 per hundredweight (cwt), down 31 cents from Tuesday, and $2.03 lower than a week earlier.
Traders also lacked direction from cash cattle prices that are expected to be steady to lower given soft beef demand. And the holiday gives packers one less day to process cattle next week, reducing their need for supplies.
Cash bids in the U.S. Plains stood at $117 to $118 per cwt against $122 to $123 asking prices, said feedlot sources.
CME feeder cattle gained slightly with spot August up 0.1 cent, or 0.07 per cent, to 140.4 which is nearly in line with CME's feeder cattle index at 140.42 cents. The spot month will expire at noon CDT on Thursday.
Other months drew support from the higher live cattle market. But, the surge in corn prices limited CME feeder cattle advances, as higher corn prices increase feeding costs for cattle feedlots.
Most-actively traded September closed up 0.1 cent, or 0.07 per cent, to 143.7 cents. October ended 0.325 cent higher, or 0.22 per cent, at 144.8.
CME hogs rallied on short-covering and on their discount to cash prices. The gains followed recent market losses as packers slashed bids for cash hogs amid ample supplies and sluggish wholesale pork demand, said analysts and traders.
So far this week, an estimated 1.295 million hogs were processed, up 23,000 from last week and 38,000 more than for the same period a year ago.
Also, the holiday-shorted work week will reduce the need for hogs by packers.
October hogs closed up 0.45 cent, or 0.61 percent, at 73.7 cents/lb. December finished 0.275 cent higher, or 0.39 per cent, at 71.025 cents.
Some attributed the buildup in hog numbers to hot summer weather that delayed the movement of hogs to market. Others cited the rush by producers to market hogs ahead of schedule after the worst drought in the United States in more than half a century pushed feed prices for livestock to all-time highs.
Still others contend that the break in sultry summer weather over the past few weeks has allowed hogs to grow quicker, creating a glut of supplies.
"Hog weights haven't been coming down recently due to cooler weather, which has caused pigs to eat pretty aggressively," said Roose.
The government's weekly average weight data showed hogs in the Iowa/southern Minnesota market last week at 268.6 lbs., up nearly a pound from the week before and 5.1 lbs. higher than a year earlier.
-- Theopolis Waters
writes for Reuters from Chicago.