Chicago Mercantile Exchange live cattle futures reached their highest level in nearly three months on Thursday, fueled by short-covering and renewed optimism for this week's cash prices, said traders.
October live cattle, which will expire on Oct. 31, finished 1.125 cents per pound higher at 114.150 cents. Most actively traded December closed 1.625 cents higher at 120.700 cents.
This week packers bid $111 per cwt for slaughter-ready, or cash, cattle in the U.S. Plains versus $116 asking prices. Cattle last week brought $110 to $111 per cwt.
Fewer cattle for sale than last week, phenomenal packer margins and decent domestic and foreign U.S. beef demand bode well for cash prices by Friday, said analysts and traders.
On Thursday, the U.S. Department of Agriculture's export sales report for the week ended Oct. 19 showed U.S. beef exports at 16,900 tonnes, up 25 percent from the previous week.
Increased slaughters and lighter animals weights in parts of the Plains suggest cattle feeders are moving cattle to market ahead schedule, said JRS Consulting owners Jack Salzsieder.
He added that increased supplies now should help mitigate the "wall of cattle" expected later this quarter based on the U.S. Department of Agriculture's recent monthly cattle report.
Strong live cattle futures pulled up CME feeder cattle.
October, which expired at noon CDT (1700 GMT) settled up 0.575 cent per pound higher at 155.425 cents. It finished nearly inline with CME's feeder cattle index for Oct. 25 at 154.40 cents.
November, the new lead month, closed up 1.000 cent to 157.175 cents.
Hog Futures Up Again
CME lean hogs gained for a third straight session, mainly led by short-covering and Thursday morning's higher wholesale pork prices, said traders.
They said some market participants sold December and at the same time bought deferred months, lifting them to new highs, in anticipation of tighter hog supplies during that period.
Thursday morning's softer cash prices capped December future's advances.
Packers charged grocers more for pork and paid less for hogs to help stabilize steadily declining but still profitable margins, a trader said.
Thursday's USDA export sales report put U.S. pork exports at 18,100 tonnes, up 58 percent from the prior week.
December hogs ended up 0.575 cent per pound to 65.050 cents, and February closed 0.925 cent higher at 70.525 cents, and reached a fresh contract high of 70.725 cents.