U.S. live cattle futures rose Friday as corn prices soared and markets rallied broadly after a Federal Reserve announcement.
CME cattle for August delivery rose 0.45 cent, or 0.5%, to $1.143 a pound in trading at the Chicago Mercantile Exchange. CME October cattle rose 1.15 cents, or 1%, to $1.1525 a pound. Feeder cattle for September rose 0.7% to $1.326.
Futures rose sharply as markets swelled midday, after Fed Chairman Ben Bernanke urged policy makers to jumpstart the economy, and corn prices added to their gains this week. The Dow Jones Industrial Average was up 130 points Friday afternoon to 11279 points. December corn futures rose 3.2% to $7.67 a bushel at the Chicago Board of Trade, finishing the week up nearly 6%.
"It's more of a commodity-friendly environment today," said Don Roose, president of brokerage U.S. Commodities Inc.
Higher corn prices are poised to be a significant factor in cattle futures for winter and spring. Resiliently high prices for feed could press feedlots, where cattle are fattened, to ration feed amounts and send lighter animals to slaughter. Higher corn prices could also discourage producers from building their herds, which would mean more mouths to feed.
Brokers said investors were also willing to take positions at lower prices since October cattle, most notably, have fallen about six cents a pound in less than two weeks. A USDA cattle-on-feed report released last week showed the effects of a severe drought in the South, where ranchers have liquidated herds at historic rates as water and grazing pasture dry up, which in turn translates to higher near-term supplies.
The cash cattle markets were quiet Friday following the majority of this week's trading on Wednesday followed by additional sales mainly in Nebraska Thursday.
For the week, trading volume on a negotiated basis in Texas/western Oklahoma was reported at about 14,000 head at mostly $1.125 a pound live. In Kansas, around 31,000 head were sold at mostly $1.13 a pound.
The week's tally for Nebraska was estimated at 38,000 head with live prices from $1.12 to $1.14, mostly $1.13 a pound and dressed prices mainly from $1.80 to $1.81 a pound.
USDA's midday boxed-beef price quote for choice grade carcasses was down $1.17 to $186.62 a hundred pounds. Select beef prices fell 57 cents to $180.42 a hundred pounds. Sales were reported at 77 total loads.
The latest HedgersEdge packer margin index was plus $72.45 a head, compared with $69.35 the previous day. The weekly average margin was plus $67.55. This is an estimate of packer returns on cattle slaughtered and processed, expressed in an index.