Chicago Mercantile Exchange (CME) live cattle futures closed higher on Thursday on technical short-covering and despite wholesale beef markets that eased again from recent record highs, traders and analysts said.
"Boxed beef may be lower but there is still good movement. Cash cattle haven't traded yet so it's just a seesaw affair in the cattle market right now," said Jack Salzsieder, a broker for K+S Financials.
The U.S. Department of Agriculture's (USDA) boxed beef report showed choice wholesale beef carcasses at $203.08 per hundredweight (cwt), down $1.32 from Wednesday (all figures US$).
Traders were waiting for direction from this week's U.S. Plains cash cattle market which had not traded as of the close of futures trading on Thursday.
"Cash cattle keep trading at a premium to futures so that's acting as a magnet for futures but most support to cattle futures was from short-covering," said Art Liming, a market specialist for Citigroup.
CME live cattle for June delivery were up 0.2 cent per pound at 120.45 cents. August delivery cattle were up 0.75, at 120.025.
There were no cash bids or asking prices reported by feedlot sources on Thursday and cash cattle last week moved at $124-$125/cwt.
Some analysts were skeptical that weakness in the cash market would develop this week, which helped keep a firm undertone in the cattle futures market.
The number of cattle up for sale is roughly steady with last week, which may support cash prices, an analyst said.
Estimated margins for U.S. beef packing companies were a positive $39.70 per head, down from $43.55 on Wednesday and below $75.25 per head a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
Feeder cattle futures turned firm on spillover support from the gains in cattle but gains were limited by an uptrend in Chicago Board of Trade corn futures.
Corn is the major cattle feed ingredient and an increase if feeding costs often cut back on the demand for young feeder cattle to place on feed in the nation's huge feedlots.
CME feeder cattle for August delivery were up 0.05 cent/lb. at 144.65 cents, and were up 0.05 at 146.9 for September.
Lean hog futures closed higher on persistent good demand for pork at the retail level and another upturn in cash hog markets.
"Cash hogs are firm and there is more aggressive buying by packers," Liming said.
Cash live hogs traded in the Iowa and southern Minnesota region on Thursday were steady to 50 cents/cwt higher and markets extending from Illinois into Ohio also were likewise steady to 50 cents higher.
Cash hog dealers said the market was uneventful in Iowa and southern Minnesota but there was still some need for hogs or demand amid a tight supply.
Packers were attempting to process more hogs than available and paying up to get them in Illinois, cash dealers said.
Estimated margins for U.S. pork packing companies were a negative $5.35 per head, compared with negative $3.25 on Wednesday and negative $1.25 per head a week ago, according to HedgersEdge.com.
CME lean hogs for June delivery were up 0.65 cent/lb. at 97.3 cents, and July hogs were up 1.25 cents, at 95.825 cents/lb.
-- Sam Nelson reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Alyce Hinton in Chicago.