CHICAGO (Dow Jones)--U.S. live cattle futures were mostly higher in Thursday as equities markets rallied and offset growing concerns over soft beef demand.
Cattle for October delivery fell 0.15 cent, or 0.1%, to $1.2025 a pound in trading at the Chicago Mercantile Exchange. The CME December contract rose 0.07 cent, or 0.1%, to $1.2092 a pound. September feeder cattle futures rose 0.32 cent, or 0.2%, to $1.3297 a pound.
The cattle complex continued to hang onto much of this week's gains after a government cattle-on-feed report before last weekend showed smaller coming supplies than most analysts expected. The rise in futures has emboldened sellers in the cash market, who are pointing to the strength in futures as they ask higher prices.
The complex was supported on Thursday by a broad recovery in equity and commodity markets as European central bankers moved closer to a plan for containing economic problems in badly hobbled countries like Greece and Italy. The Dow Jones Industrial Average was recently up 152 points to 11162. Crude rose 1.6% to $82.57 a barrel.
The October cattle contract, which expires soonest, nonetheless traded lower on Thursday in part because of growing concerns that the beef industry's current fundamentals don't justify higher futures prices. For starters, wholesale beef prices have mostly traded sideways in recent weeks, even after meat packers have been willing to pay higher prices for slaughter-ready animals. That uneven rise in prices has crimped packers' profit margins, which in turn could lead to smaller slaughter schedules.
The U.S. Department of Agriculture reported choice beef prices Wednesday down 5 cents a hundred pounds at $183.00. Select was up 15 cents at $168.81. Beef sales on the day were reported at 328 total loads.
The latest HedgersEdge packer margin index was minus $11.60 a head, compared with minus $13.40 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
Predictions for the cash cattle markets this week remain higher, but so far a price standoff remains between buyers and sellers.
Beef packers were bidding $1.16 a pound on a live basis on Wednesday, and bids are expected to remain at that level today. Meanwhile, owners are asking $1.20 or more a pound on a live basis in the Texas Panhandle and Kansas.
In Nebraska, owners were asking mostly $1.90 a pound on a dressed basis with no bids reported yet.
Prices last week in Texas, Oklahoma and Kansas were at mostly $1.16 a pound on a live basis. In Nebraska, sales prices ranged from $1.82 to $1.84 per pound dressed and $1.15 to $1.16 live.
Smaller showlists, or number of cattle offered for sale, are seen supportive for cash prices this week along with strength in futures prices compared with last week's closing levels.
Cash trading will likely not get underway until Friday, and trading volume is expected to be down from last week due to the smaller showlists, packers having negative processing margins and with the availability next week of contracted cattle for October delivery.