Chicago Mercantile Exchange live cattle on Tuesday spiked to their highest since mid-April 2016, driven by improved wholesale beef demand that may underpin cash prices this week, said traders.
They said profit-taking pulled back-month futures down from new contract highs achieved earlier in the session.
April live cattle closed 0.350 cent per pound higher at 126.775 cents. June ended up 0.075 cent at 115.650 cents, after initially reaching a new high of 116.900 cents.
Tuesday morning's average wholesale beef price climbed $1.61 per cwt to $215.74 from Monday. Select cuts surged $2.53 to $203.31, the U.S. Department of Agriculture said.
Investors await the sale of about 4,400 animals at the Fed Cattle exchange that could set the tone for this week's cattle trade.
Slaughter-ready, or cash, cattle last week in the U.S. Plains fetched mostly $128 to $129 per cwt.
Much improved packer margins and a recent wholesale beef price rally, as retailers buy meat for spring grilling, might support cash prices this week, said traders and analysts.
They also alluded to fewer cattle for sale than last week and tight supplies in parts of the Plains.
Profit-taking undercut CME feeder cattle contracts, which also initially notched new highs.
April feeder cattle closed 0.375 cent per pound lower at 138.675 cents, and earlier hit a new high of 139.825 cents.
Hogs Lowest in Six Months
CME nearby lean hog contracts sagged to six-month lows, pressured by sell stops and fund liquidation, said traders.
They said bargain buying and expectations of a seasonal cash price turnaround lifted contracts from morning lows.
Lightly traded May closed 0.575 cent per pound lower at 67.150 cents. Most-actively traded June ended 0.850 cent lower at 71.500 cents.
Funds bought cattle futures and sold hogs, said independent livestock futures trader Dan Norcini. Pork packer margins are "phenomenal," which may help support cash hog prices this week, he said.
Tuesday morning's average cash hog price in Iowa/Minnesota was at $56.60 per cwt, up 4 cents in extremely light volume from Monday, the USDA said. Tuesday's average pork packer margins were a positive $32.70 per head, up from a positive $29.10 a year ago, as calculated by HedgersEdge.com.
Pork cutout values may find support at a time when supermarkets are featuring product for outdoor cookouts, said traders.
U.S. government data on Tuesday morning showed the average wholesale pork price up $1.90 per cwt from Monday to $76.86.