Chicago Mercantile Exchange live cattle futures gained modestly on Friday as investors adjusted positions ahead of the U.S. Department of Agriculture's monthly cattle-on-feed report.
Analysts expected the report, released on Friday at 2 p.m. CT, to show the number of cattle moved into U.S. feedlots in August declined to its lowest level for the month in 17 years.
The U.S. government's separate monthly cold storage report will be issued on Monday at 2 p.m. CT. The data will include August total beef and pork inventories.
Live cattle October closed up 0.025 cent per pound, at 125.95 cents. December finished up 0.025 cent at 129.75 cents (all figures US$).
Futures' positive settlement for a third straight day stirred expectations for steady cash cattle prices.
Slack beef demand and unprofitable margins could keep a lid on cash prices.
Cash cattle bids in Texas and Kansas were at $121 per hundredweight (cwt) versus asking prices of $125, feedlot sources said. Last week, cash cattle in Texas and Kansas traded at $123, and in Nebraska at $123.50.
USDA data on Friday morning showed the wholesale choice beef price, or cutout, at $192.45/cwt, down 56 cents from Thursday. Select cuts were 79 cents lower at $176.11.
Estimated margins for U.S. beef packers were a negative 60 cents per head, compared with a negative 25 cents on Thursday and a positive $1.50 a week ago, according to HedgersEdge.com.
The September feeder cattle contract closed down 0.05 cent/lb. at 157.1 cents. It was nearly in line with CME's feeder cattle index at 156.77.
Other CME feeder cattle months closed higher, supported by firm live cattle futures and lower corn prices. Cheaper corn may encourage feedlots to buy young cattle.
October ended 0.85 cent/lb. higher at 160.225 cents while November settled 0.725 cent higher at 160.75 cents.
Hogs fall as funds sell
CME hogs slid on fund selling and profit taking before the weekend, traders and analysts said.
Market losses pressed October and December futures below their 10-day moving average support levels, which triggered sell stops.
October hogs finished 1.1 cents/lb. lower at 90.05 cents and below the 10-day moving average of 90.89 cents.
December closed at 86.075 cents, 1.225 cents lower. It finished below the 10-day moving average of 87.43 cents, but above the 20-day moving average of 85.95 cents.
The possibility of cash hog and wholesale pork prices topping out for the summer deterred potential hog futures buyers, a trader said.
Some packers are expected to curtail slaughter operations next week to realign their margins and offset a brief supply shortage in parts of the Midwest.
HedgersEdge.com estimated U.S. pork packer margins on Friday at a negative $2.20 per head, compared with a positive $1.10 on Thursday and a negative $2.45 a week ago.
A seasonal increase in hog numbers is seen pressuring cash hog prices while pumping more pork into the retail sector, the trader said.
USDA's Friday morning data reported the average hog price in the most-watched Iowa/Minnesota market at $74.03/cwt, $1.54 higher than on Thursday.
-- Theopolis Waters reports on livestock futures markets for Reuters from Chicago.