Cattle futures started the week higher as traders reacted to a government report last week suggesting cattle supply would moderate in the months to come.
The U.S. Department of Agriculture said on Friday that feedlot operators placed 1.6 million head of cattle in commercial yards in July, up 3% from a year earlier. That was below expectations and much slower than recent months. A drought in the Dakotas this summer contributed to a 16% rise in placements in June from a year earlier as ranchers offloaded cattle.
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The slowdown in July placements provided a bright spot for a market burdened by large supplies. The lower rate would likely mean tighter supplies when those cattle are ready for slaughter in the first quarter of next year, said Trey Warnock, an analyst at Amarillo Brokerage in Texas.
Cattle prices have trended lower since early June as slaughter numbers and cattle weights rose, increasing the supply of beef at a time when demand is typically softer in the summer heat.
Most-active October live cattle futures rose 1.4% to $1.08375 a pound at the Chicago Mercantile Exchange on Monday.
Livestock industry participants were closely watching the fallout of Tropical Storm Harvey on the Gulf coast of Texas over the weekend, which threatened an important cattle-grazing region. Analysts said the consequences for national supply would likely be muted for now, however.
As many of half of the state's ranchers were affected by Harvey, said Bill Hyman, president of the Independent Cattlemen's Association of Texas. Many were able to move their herds to higher ground before the storm, but torrential rains caught some off guard. Mr. Hyman said those west of Houston were particularly vulnerable.
"No one anticipated the amount of rain that we're going to get," Mr. Hyman said. "We're going to lose some cattle."
Most Texas feedyards are further north in the Panhandle, out of reach of Harvey. Analysts said the extent of the damage to the local cattle industry would only become clearer as more information flowed out of affected areas.
Hog futures, meanwhile, fell to fresh lows for the year. CME October lean hog contracts dropped 2.3% to 61.625 cents a pound, the lowest close since mid-December. Prices for cash-market hogs and pork were under pressure after falling last week.
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(END) Dow Jones Newswires
August 28, 2017 15:10 ET (19:10 GMT)