Chicago Mercantile Exchange live cattle futures extended gains on Thursday as fund buying touched off buy stops, traders and analysts said.
They said the belief that cash cattle prices are about to forge a seasonal bottom contributed to futures' advances.
And investors tweaked positions before the U.S. Department of Agriculture's monthly cattle-on-feed report. The data will be released Friday at 2 p.m. CT.
Analysts expected Friday's report to show the number of cattle moved into U.S. feedlots in August dropped to its lowest for the month in 17 years.
While futures' recent upswing and tight supplies in parts of the U.S. Plains could lend support to cash prices, lacklustre wholesale beef demand may weigh on cash.
As of Thursday, cash cattle bids in Texas and Kansas were at $121 per hundredweight (cwt) versus a few asking prices of $125, feedlot sources said. Last week, cash cattle in Texas and Kansas traded at $123, and in Nebraska at $123.50 (all figures US$).
USDA data on Thursday morning showed the wholesale choice beef price, or cutout, at $193.21/cwt, down eight cents from Wednesday. Select cuts were up 44 cents to $176.95.
Processors likely will not buy cattle until after USDA issues its report on Friday, a trader said.
Live cattle October closed 0.65 cent/lb. higher at 125.925 cents. December finished up 0.775 cent to 129.725 cents.
On Thursday, the September feeder cattle contract closed unchanged at 157.150 cents/lb. It nearly settled inline with CME's feeder cattle index at 156.77.
Other CME feeder cattle months drew support from the higher live cattle market and technical buying.
October ended 1.075 cents higher at 159.375 cents while November closed up 1.025 cents at 160.025 cents.
Hogs wilt on profit taking
CME hogs sagged on profit taking in anticipation of cash prices and wholesale pork values topping out soon, analysts and traders said.
USDA's Thursday morning data reported the average hog price in the most-watched Iowa/Minnesota market at $96.61/cwt, $2.34 higher than on Wednesday.
"Hog numbers are tight for whatever reason. That's pushing hog prices in September back up to where they were in the middle of summer," a trader said.
He said hog prices should come down as cooler weather and cheaper corn quickly allow animals to gain weight, making them more available to processors.
Some blame the current supply shortfall on a Midwest heat wave a few weeks ago. High-heat and humidity slowed down hog weight gains and reduced the movement of animals to market.
Others contend last summer's historic drought in the U.S. Plains forced hog farmers to downsize their herds, which resulted in fewer hogs for packers to draw from now.
And yet others said the spread of the porcine epidemic diarrhea virus (PEDv), first reported in May and which is fatal to baby pigs, is already starting to draw down supplies.
CME October hogs finished 0.575 cent/lb. lower at 91.15 cents and December ended at 87.3 cents, 0.65 cent lower.
-- Theopolis Waters reports on livestock futures markets for Reuters from Chicago.