Chicago Mercantile Exchange (CME) feeder cattle closed up the three-cent daily trading limit on Thursday after corn futures fell by its 40-cent price limit following a bearish government grain stocks report, analysts and traders said.
The U.S. Department of Agriculture report showed bigger-than-expected corn stockpiles.
More feed could lower input costs for cattle feedlot operators and help turn around a long streak of lost profits.
The Colorado-based Livestock Marketing Information Center calculated feedlots in February, on average, lost $197 per head on cattle sold to meat companies, extending their string of losses to 22 consecutive months (all figures US$).
"This (report) was a blessing for cattle feeders," said K+S Financials analyst Jack Salzsieder.
Despite Thursday's rally, CME feeder cattle unofficially ended down 4.5 per cent for the month. It also finished 10.48 per cent lower for quarter, biggest quarterly loss since Dec 31, 2006.
Spot March feeder cattle, which expired on Thursday, settled up 0.250 cent per pound to 135.525 cents.
Most-actively traded April ended at 143.4 cents, three cents higher. May ended up three cents to 145.075 cents.
Live cattle up with cash
CME live cattle finished higher, bolstered by stronger-than-expected cash prices that stirred short-covering into the long Easter holiday weekend, analysts and traders said.
Cash-basis cattle in the U.S. Plains traded at mostly $128-$129/cwt, up $3-$4 from last week, said feedlot sources.
Fewer cattle were available for sale this week which supported cash prices, said traders. Processors are gearing up for spring grilling as temperatures moderate across the country, they said.
And packers are buying supplies for next week, the first full slaughter week after the extended Easter holiday weekend.
Upward momentum carried April and June live cattle beyond their respective 20-day moving average resistance levels at 127.62 and 122.97 cents. The move ignited fund buying and short-covering.
"Now that we have cash in the bag, we could use some help on the meat side," a trader said.
USDA Thursday morning showed the average price for wholesale choice beef fell $1.25/cwt to 188.71; select cuts dropped 46 cents to $188.05.
Thursday morning's beef sales volume totaled 174 loads, the most for a morning since 276 loads on Feb 19.
Live cattle futures is on track to close up nearly one per cent for the month and down marginally for the quarter.
April live cattle closed 1.55 cents/lb. higher at 128.9 cents. June was up 1.4 cents to 124.375 cents.
Hogs rise before report
Hog futures settled firm on short-covering before the holiday and the government's quarterly hog report on Thursday at 2 p.m. CT.
Analysts expect the data to show modest hog herd expansion during the December-to-February quarter.
CME hogs unofficially ended down slightly for the month and almost six per cent lower for the quarter.
Spot April hogs closed at 80.6 cents, up 0.525 cents. Most actively traded June was 0.4 cent lower at 91.075 cents.
Speculative buyers await cash price direction following a narrowly mixed Thursday morning trade.
Unprofitable packer margins and stagnant wholesale pork demand could pressure post-Easter cash prices, a trader said.
U.S. pork packer margins on Thursday were at a positive $1.30 per head versus a positive $2.05 on Wednesday and a positive $4.50 a week ago, according to HedgersEdge.com
-- Theopolis Waters
writes for Reuters from Chicago.