Chicago Mercantile Exchange live cattle futures landed in positive territory for a third day in a row on Tuesday, driven by upward-trending wholesale beef values that may bode well for cash prices later this week, traders said.
Spot October closed 1.975 cents per lb higher at 140.250, and December up 1.525 cents to 143.175.
Tuesday morning's wholesale choice beef price, or cutout, gained $1.58 cents per cwt from Monday to $215.22 per cwt. Select cuts jumped $2.17 to $209.90, the U.S. Department of Agriculture said.
Beef cutout values increase as supermarkets prepare to feature product after October Pork Month, traders and analysts said.
But, they said, grocers are not buying significant amounts of beef at current high prices.
Packers are expected pay more for market-ready, or cash, cattle than last week following futures' three-day rally and improved beef sales outlook. Last week, cash cattle fetched $134 to $137 per cwt.
Traders monitored beef packer margins that were weakened by last week's steep cash price climb.
The average beef packer margin for Tuesday was $24.45 per head, down from $75.50 on Monday and $63.35 a week earlier, as calculated by HedgersEdge.com.
CME October feeder cattle ended down 0.125 cent per lb to 194.875 cents, and November up 0.300 cent to 192.450 cents.
Firm corn prices pressured October feeder cattle futures, with November supported by live cattle market buying and as much as $5 per cwt higher cash feeder cattle prices.
Higher hog futures settlement
CME lean hogs drew support from their hefty discounts to the exchange's hog index for Oct. 16 at 74.59 cents, traders said.
They said buy stops and fund buying contributed to futures gains, while cash price uncertainty and soft wholesale pork values side-lined fundamental bullish investors.
December finished up 1.875 cents per lb higher at 67.850 cents, and February 0.875 cent higher at 68.850 cents.
Cash hog prices in the Midwest Tuesday morning were in line with Monday's sales, underpinned by spotty supply shortages, regional hog dealers said.
Tuesday morning's wholesale pork price was at $88.66 per cwt, down 24 cents from Monday, USDA said.
Smithfield Foods will resume partial operations at its Tar Heel, North Carolina, packing plant on Wednesday after shoring up part of the roof that gave way on Monday, a company spokeswoman said.
Packers on Tuesday processed 398,000 hogs, down 33,000 head from last week, based on USDA estimates.