CHICAGO (Dow Jones)--U.S. livestock futures ended mostly higher Tuesday, as a slump in corn, surging equities and firm beef prices lifted the cattle complex.
CME live cattle for June closed up 1.075 cents, or 1%, to $1.04275 cents per pound. Feeder cattle for August jumped 2.475 cents, or 2%, to $1.27250.
The sharp drop in corn fueled gains in feeder cattle, which spilled over into live cattle, said David Hutchins of Amarillo Brokerage. Corn futures fell more than 2.5% Tuesday on improved crop weather, profit-taking and uncertainty about government subsidies for ethanol, the renewable fuel made from corn.
Wholesale prices are also supporting the market, analysts said. Hutchins said traders arrived Monday morning expecting boxed beef prices to fall by a few dollars this week but that prices instead climbed Monday. Packer demand has been solid, analysts added.
"Some of the story that was being used on Monday disappeared today, and there just wasn't much for sale above the market," Hutchins said.
Still, the market is in the same range it has been in since mid-May, Hutchins said. He said he thinks the market is establishing a longer-term bottom after plunging from record highs in April, but it must break above its current range to confirm that.
A jump in equities added to the market's support Tuesday, easing worries about the sluggish economy, which has weighed on demand.
Traders are looking ahead to Friday's Cattle on Feed report from the U.S. Department of Agriculture. Analysts surveyed by Dow Jones Newswires on average predict cattle on feed as of June 1 will be up 5.5% from the prior year, while May placements will be down 7.5%.
In the cash market, light sales of around 1,000 head are reported in Nebraska to a regional packer at $1.76 a pound dressed basis, up $1 from a week ago.
A few cash cattle bids at $1.04 a pound have been reported so far in the Texas Panhandle and those were countered by asking prices from $1.06 to $1.07 a pound. Some analysts predict that cash trading may not turn active until later in the week, possibly Thursday.
The USDA's midday beef price quote for choice grade carcasses was up $0.30 per hundred pounds at $173.29 and select was up $1.25 at $167.00 on 153 total loads.
The latest HedgersEdge packer margin index was plus $55.40 a head, compared with $49.00 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.