CHICAGO (Dow Jones)--U.S. livestock futures closed mostly higher Tuesday as investors weighed a broad-based rally in grains and other commodities against forecasts for a seasonal reduction in meat demand during the heat of the summer.
Cattle for August closed up 0.5 cent, or 0.4%, to $1.1335 a pound in trading at the Chicago Mercantile Exchange. Cattle in October rose 0.17 cent, or 0.15%, to $1.1985 a pound. CME feeder cattle contracts for August approached a record high and closed up 0.6% to $1.4127 a pound.
Feeder cattle finished higher despite sharp gains in corn price, which rose 39 3/4 cents, or 6.2%, in the July contract to $6.80 1/2 cents a bushel at the Chicago Board of Trade. A rise in corn prices often weighs on feeder cattle futures since higher feed costs make young cattle more expensive to raise. Rising costs over time may also cause cattle producers to trim their herds, resulting in fewer animals available to feedlot operators.
Many investors and analysts have been waiting to see how demand for animals and wholesale beef will hold up in coming days since demand typically fades in July and August. The July 4th holiday usually marks an end to the peak summer grilling season since consumers tend to grill less meat as summer weather gets hotter.
"We all know the next 30 days is a poor-demand time and we've got plenty of cattle to sell," said David Hutchins, president of Amarillo Brokerage. But "into next year, we're going to have reduced supplies for the foreseeable future."
The cash cattle markets were quiet throughout the day with no bids established yet.
Cattle owners are expected to initially ask 2 to 3 cents a pound more for their animals than last week's sales prices.
Sales in Texas last week were reported from $1.12 to $1.13 a pound, with the majority at $1.1250 a pound. In Kansas, cattle traded at mostly $1.12 a pound last week. Sales in Nebraska were from $1.78 to mostly $1.80 a pound on a dressed basis and $1.11 to $1.1250 a pound live.
USDA's midday beef price quote for choice grade carcasses Tuesday was up 62 cents to $179.22 a hundred pounds, and select rose 82 cents to $173.13 a hundred pounds on 84 total loads.
The latest HedgersEdge packer margin index was plus $11.55 a head, compared with $13.25 the previous day. This is an estimate of packer returns on cattle slaughtered and processed as expressed in the form of an index.