Live cattle futures rose Thursday as market prices again pointed to higher cash prices this week, which isn't likely to take place until Friday.
CME cattle for October delivery rose 1.17 cents, or 1%, to $1.1882 a pound in trading at the Chicago Mercantile Exchange. CME December cattle traded higher by 0.35 cent, or 0.3%, to $1.1905 a pound. Feeder cattle for September were essentially unchanged at $1.3395 a pound.
Cattle futures this week have risen faster than many traders expected, adding 4 cents a pound to October contracts since Friday.
Despite recent softening in wholesale beef prices, futures point to firming demand for beef after Labor Day, when many consumers grill more meat.
The U.S. Department of Agriculture reported choice boxed beef prices midday Thursday down 53 cents to $179.85 a hundred pounds and select beef off 12 cents to $171.01 a hundred pounds on 246 total loads.
The enthusiasm for cattle futures is tied in part to the profit margins at beef processors, who will likely want to take advantage by filling slaughter schedules. Although profit margins at packers have tightened in recent weeks as beef prices have fallen, they remain solidly profitable. The latest HedgersEdge packer margin index was plus $18.60 a head, compared with $20.55 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
Initial cash cattle bids for this week were reported at $1.12 a pound on a live basis in Texas/western Oklahoma and Kansas along with $1.80 to $1.81 a pound dressed in Nebraska. The quotes were well below the asking prices, however, which were $1.17 and up in the south and generally $1.85 dressed in Nebraska.
Trading in the cash markets is expected to be delayed until Friday. Higher live cattle futures prices encouraged cattle feeders to push up their asking prices.