U.S. cattle futures Wednesday climbed as beef prices stabilized and expectations for a rise in cash cattle prices this week grew.
The strength in cattle futures came even as other markets, including U.S. equities, declined following disappointing economic data.
Live-cattle futures for August delivery, the most actively traded contract, rose 0.35 cent, or 0.33%, to $1.057 a pound at the Chicago Mercantile Exchange. The October futures contract traded up 0.425 cent, or 0.4%, at $1.1195 a pound.
Futures for young cattle, known as feeders, rose with the August contract up 0.55 cent, or 0.4%, at $1.2780 a pound.
Cattle futures gained strength as wholesale beef prices ended a more than week-long pullback and analysts expect a government report due out Friday to show a pullback in the number of cattle added to U.S. feedlots on a year-over-year basis. Analysts surveyed by Dow Jones Newswires on average predict total cattle in feedlots will remain above year-ago levels, yet the number added will be down 7.5% compared with the same period a year ago.
Further price support came from expectations cash markets will trade steady to higher as processors continue to enjoy strong margins.
"Cattle futures continued to build off the gains from earlier in the week on ideas of firmer cash cattle markets this week," wrote Troy Vetterkind, director of livestock analysis and trading for Vetterkind Cattle Brokerage, in a morning report.
Yet gains are likely to be limited by ongoing concerns over the broader economy and consumer demand for beef. Equity markets declined Wednesday following disappointing economic data.
The Empire State Manufacturing Survey showed conditions for manufacturers in the New York region deteriorated in June. The index of general business-conditions plunged by 20 points to -7.8, falling below zero for the first time since November.
"The market is going to be very nervous," said Sterling Smith, an analyst with Country Hedging, of recent economic data and falling stock prices.
Expectations for cash cattle prices in the Texas Panhandle and Kansas now range from steady to possibly one cent a pound higher on ongoing strong beef processing margins, analysts said. Earlier predictions for cash prices this week were flat to weaker.
Cattle owners in Texas, western Oklahoma and Kansas are asking mostly $1.07 a pound. The latest bids there were at $1.04 a pound. Sales in the region last week were at mostly $1.05 a pound with a few trades in Kansas at $1.06 a pound.
Light cash cattle sales to a regional packer in Nebraska were reported Tuesday from $1.74 to $1.76 a pound dressed, steady to 1 cent higher than last week.
The U.S. Department of Agriculture's wholesale beef prices were mixed Tuesday as they stabilize after more than a week of declines. The choice beef carcass composite value was off 18 cents to $172.81 a hundred pounds. Select was up 92 cents to $166.67 a hundred pounds.
The latest HedgersEdge packer margin index is plus $55.25 a head, compared with $55.40 a head the previous day. This is an estimate of packer returns on the cattle they slaughter and process expressed in the form of an index.
Wednesday's cattle slaughter is projected to be about 130,000 head.