CHICAGO (Dow Jones)--U.S. livestock futures were mixed Monday, with cattle futures climbing in a rebound fueled by traders exiting short positions, while a pullback in corn prices weighed on some U.S. lean-hog futures contracts.
CME live cattle for June delivery settled up 0.475 cent to $1.032 per pound while the August contract closed up 0.55 cent, or 0.5%, to $1.04025 per pound.
Feeder cattle for August rose 1.15 cents, or 0.9%, to $1.24775. The market's gains, despite weakness in most other commodities, was due mostly to traders exiting short positions, analysts said. The market "got beat up pretty hard" on Friday, said Narciso Perez of Narciso Perez Cattle and Trading.
An increase in boxed-beef prices added support, although analysts said worries about demand are limiting the market's upside potential. A sluggish economy does not bode well for demand for beef, which some consumers shun in favor of cheaper meat when budgets are tight. Analysts also noted weakening packer margins.
Prices could soften in the coming weeks as more cattle, at heavier weights, enter the market, Perez said.
He noted that cattle weights have been high in the past couple of feed reports. Perez attributes that to feeding of distiller-dried grains, an ethanol byproduct, rather than high-priced corn or pasture that has been limited by drought.
A diet including the ethanol byproduct can grow animals more quickly, he said.
"The bottom line is cattle are just getting really fat really fast," Perez said.
That also means cattle spend less time in feed lots, because there is less room for them to add weight, Perez said. Feeder cattle gained Monday on firm cash prices and a retreat in corn prices, ADM Investor Services analyst Brian Brase said in a commentary.
The cash cattle markets were quiet to begin the week with no bids reported yet.
Initial asking prices range from $1.06 a pound and higher in the Texas Panhandle.
Some analysts predicted that cash trading may not develop until midweek or later, especially because monthly cattle-on-feed data are scheduled for release on Friday.
The cash cattle market may also be influenced by boxed-beef price direction since processors began the week with still-solid margins.
The USDA's midday beef price quote for choice-grade carcasses was up 99 cents per hundred pounds at $172.54 and select was up 54 cents at $165.91 on 149 total loads.
The latest HedgersEdge packer margin index was plus $49.00 a head, compared with $60.80 the previous day, and with $99.10 a week ago. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.