CHICAGO (Dow Jones)--U.S. live cattle futures eked out small gains Thursday, closing mostly higher on expectations of higher cash prices in see-saw trade.
CME live cattle for October delivery ended flat at $1.204 per pound, while December live cattle closed up 0.4 cents to $1.2125. Feeder cattle futures were mixed, with the October contract slipping 0.225 cents to $1.394 per pound.
Traders are widely anticipating higher cash prices this week, but without confirmation on Thursday, price action was choppy. The cash market is expected to climb after futures rallied to start the week on a supportive cattle-on-feed report from the U.S. Department of Agriculture.
"I think we're still waiting to see what the cash market is going to do," said Tom Leffler, head of Leffler Commodities in Kansas.
Outside market strength, including equities, added support early in Thursday's session, traders added, although that support eroded as the day wore on.
Beef prices, meanwhile, are "so-so," said Scot Miller, head of Scot A. Miller and Associates in Montana. He said that packers are supporting prices, not wanting to sell too low because "they expect they may have to pay up on the cash side."
Cash cattle bids and asking prices remain far apart and suggest that trading for the week will not develop until Friday.
Beef processors were last quoting $1.16 a pound bids in Texas, western Oklahoma and Kansas, equal to where the bulk of last week's cash trading occurred. Owners are countering with asking prices from $1.20 a pound or higher. In Nebraska's dressed market, a few bids were seen at $1.85 a pound while cattle were offered for sale at $1.90. Cattle were priced at $1.20 on a live basis.
Tight to negative processing margins may cause some beef processors to reduce slaughter schedules Friday, similar to the last two weeks in which the average for the final full day of the week was about 107,000 head compared with nearly 131,000 head the other four days of the week.
The U.S. Department of Agriculture reported choice boxed beef prices at midday Thursday up 29 cents at $183.29 a hundred pounds and select beef up 55 cents to $169.36 a hundred pounds on 160 total loads.
The latest HedgersEdge packer margin index was minus $11.60 a head, compared with minus $13.40 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.