CHICAGO (Dow Jones)--U.S. live cattle futures were choppy Wednesday as traders squared positions after a multi-day rally and ahead of the week's cash trade.
Cattle for October delivery rose 0.3 cent, or 0.3%, to $1.1990 a pound in trading at the Chicago Mercantile Exchange. The CME December contract fell 0.05 cent, or essentially flat, at $1.197 a pound. September feeder cattle futures rose 0.92 cent, or 0.7%, to $1.3580 a pound.
Cattle futures for October have surged nearly 6 cents a pound in just seven trading sessions since they closed at less than $1.14 a pound right before Labor Day weekend. During that time, wholesale beef prices have rebounded sharply as retailers stock meat cases for the fall grilling season and U.S. beef exports continue to soar over last year.
The U.S. Department of Agriculture reported choice beef prices Tuesday were up $2.34 a hundred pounds at $184.17 and select prices were up $1.02 at $174.01 on 200 total loads of volume. Choice beef prices have added $3.49 over the last week, while select prices have added $2.94.
"Packers have so far been very successful in moving beef values higher," said Ben Parks, analyst at Intl FCStone.
Some brokers say the recent sharp rise in futures leaves the complex vulnerable to a sell-off if demand for meat begins to fade at elevated prices. So far, according to USDA data, eager foreign buyers are filling any void left by slowing demand from U.S. consumers.
Expectations for cash cattle prices this week are mostly higher, based on latest futures prices, stronger wholesale beef values and smaller numbers of cattle offered for sale.
Tightened processing margins compared with recent weeks could cause cattle buyers to be tougher negotiators or may result in reduced slaughter schedules at some beef plants, analysts said.
The latest HedgersEdge packer margin index was plus $7.90 a head, compared with $3.30 the previous day. The index a week ago was at plus $20.55. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
Bids on a live basis are expected to develop around $1.15 to $1.16 a pound, but countered by asking prices at mostly $1.20 live and $1.90 or more a pound dressed.
Cattle sold last week from $1.17 to $1.18 a pound on a live basis in Texas and Oklahoma. The range in Kansas was from $1.16 to $1.18 with the majority at $1.18.
In Nebraska, cattle sold last week at $1.17 to mostly $1.18 a pound live basis.