Chicago Mercantile Exchange live cattle futures reached their highest since late April 2016, driven by short-covering amid brisk wholesale beef demand, said traders.

They said speculators bought deferred cattle contracts after Friday's U.S. Department of Agriculture monthly Cattle-On-Feed report proved less bearish than some had anticipated. February live cattle , which will expire on Tuesday, closed 1.625 cents per pound higher at 125.375 cents. Most actively traded April ended 0.550 cent higher at 115.500 cents. 

The morning's choice wholesale beef price surged $2.10 per cwt to $201.06 from Friday. Select cuts climbed $1.61 to $197.09, the USDA said.

Cassandra Fish, author of industry blog The Beef, said seasonal growth in slaughter-ready cattle supplies appears to be met with robust demand, if sales to retail/food service consumers continue to flourish at currently attractive wholesale prices.

"With Lent beginning this week, there is caution here as well, but there is also optimism for post-Easter beef clearance," said Fish.

Much improved packer margins and wholesale beef values might underpin this week's prices for slaughter-ready, or cash, cattle that last week in the U.S. Plains brought $124 to $125 per cwt.

Monday's average beef packer margins were at a negative $20.20 per head, up from negative $33.85 on Friday, as calculated by HedgersEdge.com.

Live cattle futures gains and steady-to-higher cash feeder cattle prices boosted CME feeder cattle futures.

March feeders closed 2.150 cents per pound higher at 123.850 cents. 

Firmer Hog Futures Close

Nearby CME lean hogs were supported by their discounts to the exchange's hog index for Feb. 23 at 77.39 cents, said traders.

They said weaker cash and wholesale pork values capped market advances. April hogs ended up 0.100 cent per pound to 68.125 cents, and May closed up 0.050 cent to 74.025 cents.

Monday morning's cash hog price in Iowa/Minnesota averaged $71.58 per cwt in light sales volume, $1.59 lower than on Friday, the USDA said.

U.S. government data on Monday morning showed the average wholesale pork price dropped 75 cents per cwt to $81.16 from Friday, following $12.25 lower pork bellies.

Processors are waiting for pork belly prices to come down before putting them into storage for later use, an analyst said.

A Midwest hog merchandiser said packers may soon start taking less money off cash bids as their margins improve.

HedgersEdge calculated Monday's average pork packer margins at a positive $19.75 per head, up from a positive $11.25 on Friday.