By Kelsey Gee
CHICAGO--U.S. cattle futures rallied Tuesday, lifted by recent
gains in the wholesale-beef market, which have raised hopes that
demand could be setting in for discounted meat products.
August live-cattle futures picked up 2.025 cents, or 1.4%, to
$1.4505 a pound at the Chicago Mercantile Exchange, marking a
one-week high after that contract recently slid to the lowest
levels since June 2014. Most-active live-cattle futures for October
advanced 2.825 cents to $1.4680 a pound.
Feeder-cattle futures for August gained 2.5 cents to $2.1125 a
pound.
Demand worries have driven the cattle market to the lowest
levels in a year, amid a sharp drop in beef prices in July, which
has squeezed processing margins and reduced the incentive packers
have to bid aggressively for cattle. Purchases of meat typically
wane during the hottest months of the year, a trend exacerbated by
plentiful pork and poultry supplies this summer, which have
presented retailers with far cheaper alternatives to hamburgers and
steaks.
However, stability so far this week in the beef-product market
has fueled gains in cattle futures, as investors bet the recent
decline has been steep enough to attract some bargain buyers
Tuesday.
"The beef market found some support on Monday, which has raised
the idea that that [recent dip] was the seasonal low" in prices,
said Don Roose, president of U.S. Commodities, a brokerage in West
Des Moines, Iowa.
The optimism about the strength of beef demand has also
encouraged ideas that packers may purchase cattle for higher prices
compared with last week's range of $1.45 to $1.46 1/2 a pound live,
and $2.32 a pound dressed, which is a form of marketing that
accounts for meat yielded from the carcass. The U.S. Department of
Agriculture reported Tuesday that wholesale beef prices rose
further at midday, picking up 93 cents to $233.20 per hundred
pounds of choice-grade meat.
Hog futures also climbed, getting a boost from buying across the
livestock markets. August hog futures rose 1.95 cents to 79.475
cents a pound. Hogs for October picked up 1.5 cents to 65.05 cents
a pound.
Write to Kelsey Gee at kelsey.gee@wsj.com
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