U.S. live cattle futures bounded to life-of-contract highs for the third straight session on Wednesday, rising on expectations that beef packers will continue paying higher prices in Plains cash markets, traders said.
About 1,500 cattle sold at the weekly Fed Cattle Exchange online auction at $120 per cwt, which was up from feedlot sales last week ranging from $116 to $119. That bolstered hopes that strong packer demand will provide support to the futures market.
December live cattle futures settled up 0.975 cent at 126.600 cents per pound on the Chicago Mercantile Exchange. The three-day percentage gain of 4.8 percent was the biggest such streak since May.
CME January feeder cattle futures climbed to a contract high of 161.250 cents, before settling at 160.650 cents per pound, up 1.075 cents.
Some investors were buying cattle futures and selling hogs. While cattle fetched higher prices at the online auction, cash hog prices fell for the second straight day at the key Iowa and southern Minnesota market, according to U.S. Department of Agriculture data.
"Both markets have a cash bias to them," said Global Commodities Analytics President Mike Zuzolo.
"The biggest thing driving the hogs is the cash market looks a bit toppy," he added. "We've resumed the mindset that futures want to buy into the (live) cattle market and sell the hogs."
CME December lean hog futures settled down 1.400 cents, or more than 2 percent, at 66.600 cents per pound, easing one day after rising by more than 4 percent.
February lean hog futures also declined but all other deferred contracts were up about 1 percent, led by a 1.250-cent gain to 82.850 cents in June hog futures.
The U.S. hog herd is nearly record-large but some producers were scaling back farrowings, which could result in slightly tighter supplies next year.