U.S. cattle futures were higher on Thursday on a late bout of short-covering in consolidation trade, but weak cash markets and the global economic uncertainty dampened bullish momentum, analysts and traders said.
"Cattle are suffering from the fallout of other markets. The weak macro behaviour is weighing on futures," said Sterling Smith, futures specialist for CitiGroup.
Although the stock market was staging a mild bounce and the dollar sagged, commodities buying was restrained because investors were hesitant to buy and hold futures for a long-term play.
"They're trying to consolidate near the lows. There were a lot of cattle coming to market because of the higher feed prices and now it's trying to consolidate," Smith said.
Cattle fell to a 2-1/2 month low at mid-week on a broad-based sell-off and Smith said there was technical trend line support in the December cattle contract at 124.15.
"We bounced off that level and we'll have to see if it holds," he said.
Chicago Mercantile Exchange (CME) October live cattle were up 0.225 cents per pound at 122.450 cents (all figures US$). December was up 0.425 at 125.175.
"There is more uncertainty than ever and that's not good for a market. We were a little lower overnight, but not a lot, so it looks like it's trying to bottom out, but I'm not sure," said Jack Salsieder, broker for K+S Financials.
The U.S. Department of Agriculture (USDA) said in its weekly export sales report on Thursday that U.S. beef exports were at a net 9,800 tonnes last week, down 10 per cent from the previous week and down 36 per cent from the prior four-week average.
Estimated margins for U.S. beef were a negative $37 per head on Thursday, compared with a negative $38.50 on Wednesday and a negative $24.65 a week ago, according to HedgersEdge.
Choice beef at wholesale was $193.30 per hundredweight (cwt), up 85 cents from Wednesday, and select cuts were up 37 cents at $181.88, according to USDA.
USDA reported the cattle slaughter on Thursday at 129,000, up from 123,000 a week ago and down from 131,000 a year ago.
Most CME feeder cattle futures contracts were higher on the continued downward spiral of corn futures that led to lower feed costs for feed lot operators, increasing the demand for feeder cattle.
The exception was the lightly traded September contract, which was hit by profit-taking and traded down 0.175 cents/cwt at 143.275 cents during the contract's expiration.
Active October was up 0.125 at 146.225.
Hog futures mixed
CME hog futures were mixed with spot October posting gains for the second day in a row on spreading, short-covering and firmer cash markets.
"Hog weights are coming down and that's telling me that they're tired of losing money and are just sending hogs to market as soon as they can," Salsieder said.
"That would mean a little less pork available so it may be bottoming out," he said referring to the mixed and consolidation-type trade in hog futures on Thursday.
CME October hogs were up 0.35 cents/lb. at 77.225 cents and December was down 0.775 at 73.6.
U.S. Midwest cash hogs traded steady to 50 cents/cwt higher on Thursday as packers searched for supplies, dealers said.
Some position-squaring was noted ahead of USDA's quarterly hogs and pigs report to be released at 2 p.m. CT on Friday.
An average of analysts' estimates in a Reuters poll placed the number of hogs in the United States at 67.705 million, up 0.7 per cent from a year ago. However, the number kept for breeding were down 0.3 per cent from a year ago while the number kept for market were up 0.8 per cent.
Packers were planning a lighter Saturday kill since cooler weather was cutting into the number of hogs going to market.
HedgersEdge estimated the average pork packer margin at a positive $3.05 per head compared with a positive $8.05 on Wednesday and a positive $9.90 a week ago.
USDA reported the hog slaughter on Thursday at 434,000 contracts, up from 431,000 a week ago and above the 426,000 a year ago.
-- Sam Nelson writes for Reuters from Chicago.