Cattle futures rose after several sessions of heavy losses, with bargain hunters taking advantage of discounted prices.
February-dated contracts for live cattle rose 0.4% to $1.17675 a pound at the Chicago Mercantile Exchange.
Futures fell low enough in recent days to trade at a discount to the cash market for slaughter-ready cattle. That, along with a series of other supply-demand and macroeconomic factors, created the potential for a rebound in the front-month February contract, said Craig Turner, a senior broker at Daniels Trading in Chicago.
"Beef prices remain strong as does consumer demand. We continue to see employment strong in the U.S., wages and earnings higher, and the cold weather is having a negative effect on cattle weights," Mr. Turner said.
The week's cash trade for slaughter-ready cattle also got off to an unusually early start. Meatpackers paid an average of $120 per 100 pounds live and $193 dressed for physical cattle on Monday, according to the U.S. Department of Agriculture, with follow up trade of $192 on Tuesday. Those prices were mostly a dollar or two lower than a week earlier, the agency said.
Feedyards who had hedged in the futures market were nevertheless willing to sell at those prices, analysts said, taking advantage of the discount of futures to cash markets to sell their cattle, get out of their futures positions and pocket the difference.
Monday and Tuesday's prices were likely to set the direction of the cash market for the rest of the week, they said.
Wholesale beef prices continued their ascent on Tuesday, rising $1.17 to $211.37 per 100 pounds as of midday.
Hog futures were also mixed. The CME front-month February lean hog contract rose 0.3% to 73.175 cents a pound, with later months steady to lower.
The cash market for hogs continued last week's higher trend, but analysts said futures hit resistance around current levels. Chart patterns suggested to some traders that the market was at a short-term top, they said.
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(END) Dow Jones Newswires
January 09, 2018 15:18 ET (20:18 GMT)