U.S. livestock review: Cattle futures rally on near-term demand

U.S. livestock futures rallied Friday as buying interest from pork and beef packers, tied in part to exports, rallied both the cattle and hog complexes.

Cattle for October delivery rose 1.75 cents, or 1.5%, to $1.2215 a pound in trading at the Chicago Mercantile Exchange. December cattle traded higher by 1.4 cents, or 1.2%, to $1.2265 a pound. Feeder cattle for October rose 0.8% to $1.4052 a pound.

The often tricky relationship between cash prices and futures prices drove the cattle complex higher during the session. A rise in futures earlier in the week emboldened animal owners in cash markets to hold out for higher prices. Their ability to do so in turn cheered the futures market, brokers said.

Cattle traded hands in the cash markets at mostly $1.21 a pound, or five cents higher than prices last week--and about 1 cent higher than asking prices on Thursday.

Although some signs suggest beef demand has weakened in recent weeks, meat packers were said to need supplies for next week to fill orders. A major meat packer also entered the cash market on Friday, brokers said, and was forced to bid higher to consummate trades.

Beef processors have so far been undeterred by the combination of sideways wholesale beef prices and weaker profit margins, which some analysts have said could press them to trim slaughter schedules.

The U.S. Department of Agriculture said wholesale prices for choice boxed beef was down 85 cents to 182.41. Select was up 24 cents to $169.51 on a total of 113 loads.

The latest HedgersEdge packer margin index per cattle is minus $9.10 per head, compared with minus $11.60 the previous day. The index for the week was minus $11.55. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.