CHICAGO (Dow Jones)--Live cattle futures rose Monday after prices in cash cattle markets rose sharply last week and pointed to rising meat demand.
Cattle for October delivery rose 0.55 cent, or 0.5%, to $1.19 a pound in trading at the Chicago Mercantile Exchange. The CME December contract rose 0.35 cent, or 0.3%, to $1.186 a pound. September feeder cattle futures rose 0.05 cent, or essentially unchanged, to $1.3327 a pound.
Cash prices last week generally rose 4 to 5 cents a pound as owners were able to demand higher prices from meat packers.
Cash cattle prices appeared to rise faster than wholesale beef prices -- which are difficult to gauge due to thin government data -- so investors will be watching to see whether meat prices show supportive signals early this week. The next round of cash trading isn't likely to take place until Wednesday or later.
"The question will be, can we trade higher cash cattle again this week?" said Troy Vetterkind, president of Vetterkind Cattle Brokerage. "I think it is going to take a couple day's to figure that out," he said. "We will need to see how well beef moves...early this week."
The U.S. Department of Agriculture reported choice boxed beef prices Friday up 31 cents to $180.13 a hundred pounds. Select beef rose 50 cents to $171.29 a hundred pounds, and beef sales on the day were reported at 256 total loads.
In the broader picture, investors are watching to see whether meat demand from U.S. and foreign consumers can keep pace with an expected growth in supplies of animals in coming weeks and months. Feedlots and producers will have higher numbers of cattle to slaughter as they push through animals that drought-hit ranchers in the south hurried to sell earlier this summer.
Exports of beef, meanwhile, were up 27% over last year, from January through July, the government said last week.
The Plains cattle markets will be quiet throughout the day Monday following moderate to active trading on Friday that gave processors adequate supplies for most if not all of this week.
Cattle sales on Friday in the Texas Panhandle were from $1.17 to $1.18 a pound on a live basis, up four to five cents from the previous week. In Kansas, the reported range was from $1.16 to $1.18 but the majority of the cattle sold at $1.18, up five cents from a week ago.
Feedyards in Nebraska sold additional cattle Friday at $1.17 to $1.18 a pound on a live basis, following sales on Thursday at mostly $1.87 a pound dressed and $1.17 live. Sales there late Thursday afternoon were reported at mostly $1.87 a pound on a dressed basis, up from last week's trades at mainly $1.81 with a few at $1.82 a pound.
Some analysts said with processing margins tightening, unless beef prices rebound sharply this week, processors may trim their slaughter schedules. If so, that could reduce near-term demand for cattle, yet also be supportive for wholesale beef prices.
The latest HedgersEdge packer margin index was plus $13.25 a head, compared with $13.55 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.