U.S. cattle futures settled mixed Friday as a drop in corn prices and a better-than-expected April jobs report offset slumping cash markets and wholesale prices.
Lean hog futures finished mixed as well with the June contract, which is the most heavily traded, settling near flat, while the May contract gained in thin volumes.
The June futures contract for cattle settled up 0.1 cent, or 0.1%, at $1.0985 a pound, while the August contract fell 0.3 cent, or 0.3%, to $1.1157 a pound at the Chicago Mercantile Exchange. Futures for young cattle, known as feeders, climbed, with the May futures contract up 0.5 cent, or 0.4%, to $1.2912 a pound, and the August contract rose 1.02 cents, or 0.8%, to $1.3277 a pound.
Fueling the rise in feeder prices was a sharp pull back in corn futures, which fell 3.2% at the Chicago Board of Trade as the outlook for plantings brighten. Lower corn prices mean it is cheaper to raise cattle, boosting demand for feeder cattle.
Analysts said the rise in feeder cattle prices helped support live cattle futures. Further support came from the Labor Department's report on April nonfarm payrolls that showed the private sector posting its strongest employment gain in five years.
Yet traders remain cautious about demand for beef, even as supplies may tighten due to drought conditions in Texas, Kansas and Oklahoma, said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
"Maybe we have got the supplies getting more in line with the price action," he said.
Cattle futures have fallen since early April in the face of concerns over consumer demand as food and gasoline prices rise. Pressure also has come from a slow start to grilling season because of cool, wet weather in many parts of the U.S.
Boxed beef prices, which are a measure of wholesale prices, on Friday continued to show declines with choice quoted off $1.92 at $177.42 per hundred pounds and select down $2.45 at $171.78 per hundred pounds, according to the U.S. Department of Agriculture.
Cash cattle markets were quiet Friday after some trading in Texas and Kansas on Thursday at $1.14 a pound on a live basis. Sales there were mainly at $1.15 a pound this week, down from $1.16 to $1.17 a pound last week. No trading was reported in Nebraska on Friday.
The latest HedgersEdge packer margin index is minus $30.85 a head, compared with the previous estimate of minus $22.25 a head. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.