U.S. feeder cattle futures gained 1 percent and live cattle futures were narrowly higher on Thursday amid rising demand for animals, especially for grazing, traders and analysts said.
Greening pastures in the Plains region boosted demand for lighter-weight cattle to feed on grass, with beef packers aggressively buying slaughter-weight cattle earlier this week amid big profit margins and high beef prices.
Chicago Mercantile Exchange April feeder cattle futures settled 1.850 cents higher at 124.625 cents per pound, highest in a week. More actively traded CME April live cattle finished 0.525 cent higher at 116.500 cents.
Weakening prices for corn also bolstered feeder cattle, as cheaper feed reduces costs for fattening cattle. Chicago Board of Trade corn hit a roughly five-week low on expectations for big harvests in South America.
“You start getting grass demand as well as feedlot demand,” Tommy Beall, president of Beall Consulting Group Inc, said of the gains in feeder cattle.
Grazing cattle prices were as much as $5 per cwt higher at a cash auction in Dodge City, Kansas, according to the U.S. Department of Agriculture on Wednesday.
“Trade moderate, demand moderate, very good for cattle suited for a grazing,” USDA said.
Fast-moving wildfires have burned nearly 2 million acres in Texas, Oklahoma and Kansas, killed six people and left thousands of cattle dead, officials said. However, the fires had minimal impact on livestock futures, traders said. There are nearly 94 million cattle in the United States, according to USDA.