U.S. livestock review: Cattle futures improve following USDA reports

CHICAGO (Dow Jones)--U.S. live cattle futures rose sharply Thursday after two USDA reports showed supportive fundamentals and markets rallied broadly through mid-day.

Cattle for August delivery rose 2.15 cents, or 1.9%, to $1.1645 a pound in trading at the Chicago Mercantile Exchange. CME October cattle rose 2.07 cents, or 1.8%, to $1.1952 a pound. August feeder cattle rose 1% to $1.346 a pound.

Morning reports from the U.S. Department of Agriculture forecast a worse-than-expected corn crop and more supportive fundamentals in 2011 and 2012 due to higher export sales of beef and lower domestic production.

Corn futures for September were up 24 1/2 cents to $7.02 1/2 a bushel at the Chicago Board of Trade. Higher corn prices are thought by some analysts to support livestock futures since higher feed costs can pressure producers to shrink production.

Prices also rose on a broad rally in markets. The Dow Jones Industrial Average was recently up 503 points to 11223.

Cash cattle markets also supported futures as some producers were able to demand higher prices than last week.

Cash cattle sales were reported in Nebraska at $1.84 to $1.85 a pound on a dressed basis, up five to six cents a pounds from a week ago. Higher boxed beef prices this week and expectations of improved domestic demand for beef ahead of the Labor Day holiday in early September contributed to the stronger asking prices by cattle owners.

Active sales were also reported in Kansas at $1.16 a pound on a live basis, up four cents from the majority of sales there last week. Packers were last bidding $1.16 a pound in Texas as well. Cattle feeders raised their asking prices to $1.16 or $1.17 from mostly $1.15 a pound on Wednesday as beef prices and futures continued to move higher.

USDA's midday boxed beef price quote for choice grade carcasses was up $1.79 to $178.02 a hundred pounds. Select beef prices rose $1.70 to $174.18 a hundred pounds. Sales were reported at 157 total loads. If the midday gains hold through the afternoon, beef prices will be at a fresh three-week high for choice and a four-week high for select.

The latest HedgersEdge packer margin index was plus $20.20 a head, compared with $16.00 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.

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