Cattle futures bounced from a low for the year to close higher Tuesday as traders bet that prices had bottomed.
Contracts for live cattle have fallen from a seasonal peak in early June to trade at 2017 lows in July, sliding around 15% as seasonal pressures such as growing supplies and weaker beef demand pressure prices.
August-dated live cattle futures at the Chicago Mercantile Exchange reversed course to rise 0.7% to $1.128 a pound on Tuesday, however.
The live cattle market "is still technically under pressure," said Brad Bauman, an independent broker at the Chicago Board of Trade, though "people are looking for a seasonal bottom."
The recovery in the live cattle market was helped by contracts for feeder cattle, which need to be fattened before slaughter. A selloff in the grain futures market, with corn falling over 2%, helped feedyards by lowering the costs of fattening their herds.
CME August feeder cattle rose 2.1% to $1.49175 a pound.
Analysts said this week's cash market would determine whether futures could go lower yet. Cattle traded mostly around $1.17 a pound live and $1.87 a pound dressed last week, and meatpackers buying cattle from feedyards for slaughter will likely be looking to lower their bids.
The online Fed Cattle Exchange auction on Wednesday morning will give an early sense of how cash prices will trend. A little over 1,000 cattle are listed, down from over 2,000 a week in July.
Troy Vetterkind, owner of Vetterkind Cattle Brokerage in Thorp, Wis., said current levels in the futures market could encourage traders to pull out of bets that prices would fall further, but longer term live and feeder cattle contracts still had room for losses.
Hog futures, meanwhile, fell on continued weakness in the cash market. The CME's cash hog price index fell to 88.75 cents a pound on Monday, and analysts expected prices to slide further in Tuesday's cash trade.
CME August lean hog futures fell 0.6% to 79.8 cents a pound.
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(END) Dow Jones Newswires
August 01, 2017 15:38 ET (19:38 GMT)