Chicago Mercantile Exchange (CME) live cattle futures moved higher on Tuesday, lifted by short-covering after wholesale beef prices resumed their uptrend, said traders and analysts.
U.S. Department of Agriculture data late on Tuesday showed wholesale choice beef at $197.28 per hundredweight (cwt), up 40 cents from Monday (all figures US$).
Select cuts gained 10 cents to $195.70 after hitting a new high on Tuesday morning of $196.73/cwt, surpassing the record mark of $195.60 set on Monday, according to USDA.
"Consumers have been picking less-costly select cuts over choice, while coping with a precarious economy, high gasoline prices and the payroll tax increase," an analyst said.
Investors are expecting cash cattle to trade fully steady with last week's $128/cwt, based on positive but thin packer profit margins.
There were no cash bids reported by feedlot sources, who said asking prices were at $130/cwt and higher.
HedgersEdge.com calculated the U.S. beef packer margins on Tuesday at a positive $1.50 per head versus a positive $3.10 on Friday and a negative $30.60 a week ago.
Deferred contracts drew support from the roll by funds that follow the Standard + Poor's Goldman Sachs Commodity Index (S+PGSCI).
Funds that track the S+PGSCI moved their spot-April long positions mainly into June and August. Tuesday was the fourth of five days for that roll.
Automatic budget cuts have forced the government to suspend several statistical reports, including an upcoming semiannual cattle inventory survey, the agency said on Tuesday.
April live cattle closed at 128.7 cents per pound, up 0.575 cent. June was up 0.45 cent, to 123.875 cents. August settled 0.625 cent higher at 125.275 cents.
CME feeder cattle closed in tandem with the higher live cattle market.
Spot March feeders settled 0.6 cent/lb. higher at 138.8 cents. Most-actively traded April ended at 142.2 cents, up 0.825 cent.
Hogs advance with cash
Higher cash hog prices generated CME hog futures buying interest, said analysts and traders.
"Tight supplies forced packers to spend more for hogs. But higher cash prices and weaker wholesale pork values are wearing down their (packer) margins," a trader said.
USDA reported late on Tuesday that the average hog price in the most-watched Iowa/Minnesota market was 83 cents/cwt higher at $74.87.
And wholesale pork prices slipped 49 cents/cwt on Tuesday to $78.36, according to USDA.
Funds also rolled some of their April long positions into the June and July contracts.
April hogs closed at 81.45 cents/lb., up 0.3 cent. June was up 0.2 cent to 91.05 cents.
-- Theopolis Waters writes for Reuters from Chicago.