CHICAGO (Dow Jones)--U.S. live cattle futures rose Tuesday after markets rebounded broadly from a set of steep sell-offs and prices for beef were strong ahead of seasonal growth in demand.
Cattle for August delivery rose 0.6 cent, or 0.5%, to $1.147 a pound in trading at the Chicago Mercantile Exchange. The CME October contract rose 0.9 cent, or 0.8%, to $1.185 a pound. August feeder cattle futures were up 0.82 cent, or 0.6%, to $1.334 a pound.
The cattle complex rose as part of a broad rebound that stretched across commodities and stocks. Markets have fallen sharply in recent days after a Standard and Poor's downgrade of U.S. debt weighed heavily on markets that were already rattled by a debt crisis in Europe and anemic job growth in the U.S. Crude was up 1.5% to $82.51 a barrel and the Dow Jones Industrial Average was up 188 points to 10998.
After Monday's jarring 635-point drop in the Dow, analysts expected markets to be volatile ahead of a Tuesday afternoon statement by the Federal Reserve's monetary-policy committee. Investors will be watching closely for any Fed efforts to calm markets or improve the economy.
"Cattle futures are again subject to the Wall Streeters today and Bernanke's expected comments later this afternoon," said Ryan Turner, analyst at brokerage FCStone.
The August cattle contract, which expires at month's end, found support in Monday's strength in beef prices. The U.S. Department of Agriculture reported choice boxed beef prices rose $1.61 to $174.25 a hundred pounds and select beef was up 10 cents at $169.77 a hundred pounds.
That rise in beef prices points to a coming growth in demand for meat among consumers, who typically buy more meat starting Labor Day weekend as summer temperatures start to cool. Hotter weather in July and August usually depresses demand for beef as consumers grill less and also favor lighter meals.
Cash cattle bids remain unavailable and will likely not be established until Wednesday or Thursday, since trading is again expected to occur late in the week.
Asking prices on a live basis are expected to be generally two cents a pound or more above last week's sales prices. Trading last week occurred at mostly $1.13 a pound in Texas/western Oklahoma, $1.12 in Kansas and in Nebraska from $1.13 to mostly $1.135 a pound.
Dressed sales in Nebraska last week were reported at mostly $1.78 a pound with a few as high as $1.81 a pound.
The arrival of cooler temperatures across the upper Midwest is reducing stress in the animals there and will allow them to gain weight more easily.
The latest HedgersEdge packer margin index was plus $14.85 a head, compared with $33.20 the previous day.
Tuesday's cattle slaughter is projected to be about 128,000 head.