Chicago Mercantile Exchange live cattle contracts hit a one-month high on Friday, driven by fund buying and short-covering, said traders.

Futures' discounts to this week's better-than-anticipated cash prices generated more buying. June closed 3.400 cents per pound higher at 1s 30.825 cents, and August 1.350 cents higher at 126.050 cents.

Live cattle's trading limit will return to 3.000 cents on Monday after failing to settle up/down the 4.500-cent expanded limit on Friday.

Packers this week paid mostly $134 to $137 per cwt for market-ready, or cash, cattle in the U.S. Plains that last week brought $132 to $133.

Insufficient processor inventories and impressive profits emboldened cattle sellers to hold out for more money for their livestock.

Wholesale beef demand fared relatively well despite the end of National Beef Month in May and plentiful competitively priced pork.

Bearish traders periodically sold futures betting that beef and cash cattle prices would fall sharply, which resulted in large unjustified discounts to current cash returns, said Oak Investment Group President Joe Ocrant.

"It just does not happen, and those that have traded on the coming break (decline) have had to cover their short positions," he said.

Friday afternoon's average wholesale beef price was down 34 cents per cwt to $245.24 from Thursday. Select cuts rose 84 cents to $218.06, the U.S. Department of Agriculture said.

CME feeder cattle hit its highest level since March 10, 2016 led by live cattle futures gains.

August feeders ended 1.650 cents per pound higher at 158.725 cents. CME's feeder cattle will resume its normal 4.500-cent limit after not settling up/down Friday's 6.750-cent expanded limit. 

Mostly Weaker Hog Futures Close

Traders sold deferred CME lean hog futures and at the same time bought the June contract that will expire on June 14, said traders.

Profit taking and soft cash prices capped June advances and further weighed on other contracts. June closed up 0.300 cent per pound at 81.225 cents. July ended down 0.150 cent at 81.975 cents, and August 0.300 cent lower at 81.700 cents.

Friday afternoon's average cash hog price in Iowa/southern Minnesota was $73.96 per cwt, 49 cents lower than on Thursday, the USDA said.

Packers may have cut cash bids after buying enough hogs through early next week, a trader said.

However, processors may soon raise bids given their profitable margins, good pork demand and seasonally tightening supplies, he said.