Chicago Mercantile Exchange (CME) live cattle futures rose on Tuesday, helped by short-covering following higher wholesale beef prices, analysts and traders said.
Optimism for cash cattle prices generated additional live cattle futures buying interest, they said.
CME live cattle spot February settled 0.525 cent per pound higher at 127.6 cents. The most-active April ended up 0.025 cent to 132.3 cents (all figures US$).
The U.S. Department of Agriculture showed the price for wholesale choice beef Tuesday morning at $184 per hundredweight (cwt), up $1.26 from Monday; select cuts jumped $1.16 to $180.17.
Packers will continue to cut back slaughters, which should help improve their margins and boost wholesale beef prices, a trader said.
From Monday to Tuesday, packers slaughtered 236,000 head of cattle, 13,000 less than a week earlier and a year ago during the same period, according to USDA.
HedgersEdge.com put the average beef packer margin for Tuesday at a negative $69.70 per head, compared with a negative $86.95 on Monday and a negative $23.05 on Jan. 29.
"We will likely see at least steady, and possibly higher cash cattle prices, as it appears we're putting in a short-term bottom on the beef side," said Oak Investment Group president Joe Ocrant.
Feedlot sources reported no cash cattle bids or asking prices. Cash cattle last week moved at mostly $122 to $124/cwt, they said.
CME feeder cattle slipped on lower prices for younger cattle at the most-watched Oklahoma City market.
Traders cited deferred-month live cattle market weakness and technical selling.
March finished down 0.35 cent/lb., to 148.525 cents. April closed 0.375 cent lower to 152.025 cents.
Most hogs drop on spreads
Hog futures ended mostly lower as bullish spreads supported spot February but pressured deferred contracts, traders and analysts said.
Spot February hogs settled up 0.25 cent/lb., at 88.325 cents. February tracked CME's lean hog index at 88.88 cents before the spot month expires on Feb. 14.
Most-active April ended at 87.7 cents, 0.65 cent lower and June closed 0.65 cent lower at 96.45 cents.
Some people are concerned about pork values moving forward as we start to come into more hog numbers and as packers work to realign their margins, said R.J. O'Brien hog futures trader Tom Cawthorne.
The average hog price at the most-watched Iowa/Minnesota market on Tuesday morning was $85.44/cwt, $2.13 lower than on Monday, USDA said.
The average pork packer margin for Tuesday was a negative $5.50 per head, compared with a negative $8.15 on Monday and a negative $4.80 on Jan. 29, according to HedgersEdge.com.
-- Theopolis Waters writes for Reuters from Chicago.