Cattle futures turned higher as the week's cash trade started.
Meatpackers paid $109 per 100 pounds for 230 head of live Kansas cattle at Wednesday morning's online Fed Cattle Exchange auction, which helps establish price direction for the week.
That was slightly lower than last week's average price of $111. Futures nevertheless rose after the auction, with some traders wagering prices in the broader cash market would be steady this week despite larger showlists of slaughter-ready cattle.
Rising wholesale beef prices and favorable processing margins should give meatpackers flexibility to pay steady money on the cash market. The HedgersEdge processing index was $99 a head on Wednesday.
October live cattle futures rose 0.3% to $1.11475 a pound at the Chicago Mercantile Exchange after falling earlier this week.
Traders are looking to a monthly government cattle report on Friday, which will update the market on supplies of cattle being fattened in feedlots. Analysts surveyed by The Wall Street Journal expect the total number of cattle on feed as of Oct. 1 to rise 5% from a year earlier, with cattle placed in feedlots for fattening -- an indication of supplies in the months to come -- up 7%. The number of cattle marketed, or sent to slaughterhouses, likely rose 3%, according to average estimates.
With beef production this quarter already expected at a record, analysts say growing supplies will pressure prices going into 2018.
Hog futures rose Wednesday, regaining ground after a selloff on Tuesday. CME December lean hog futures rose 2.5% to 63.75 cents a pound. That was the highest close since Sept. 5.
Ongoing strength in the cash hog market continued to attract buyers to futures, analysts said. Cash hog prices rose almost $2 to $60.35 per 100 pounds on Tuesday, and market participants expected gains of as much as another $2 on Wednesday.
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(END) Dow Jones Newswires
October 18, 2017 15:32 ET (19:32 GMT)