CHICAGO, Dec 12 (Reuters) - Chicago Mercantile Exchange live cattle futures extended gains on Tuesday as the market continued to rebound from steep losses last week.
The most actively traded contact has climbed 3.8% from a 14-month low reached on Thursday. Volatility is expected to remain high after the sharp setback from historic highs in September, brokers said.
Prices rallied earlier this year as U.S. producers fueled supply concerns by slashing herds in the face of a drought that reduced the availability of land for grazing.
"It appears we do have a low in place to work with using last Thursday's lows," said Ross Baldwin, hedge strategist for AgMarket.Net. "The meltdown across the live cattle market last Thursday felt like complete capitulation."
Most-active February live cattle settled 0.700 cent higher at 168.600 cents per pound on Tuesday.
Increased demand for wholesale beef supported the recovery in futures prices, brokers said.
The U.S. Department of Agriculture (USDA) priced choice cuts of beef at $292.78 per hundredweight (cwt), up $2.35 from Monday. Choice cuts also rose by more than $2 on Monday, in a turnaround from an April low reached on Friday.
"Demand for choice beef remains very high," Baldwin said.
CME January feed cattle jumped 1.3 cents to end at 219.250 cents per pound.
Some lean hog futures also traded higher, with the CME February futures contract settling up 0.925 cent at 68.250 cents per pound.
U.S. pork processors slaughtered an estimated 479,000 hogs on Tuesday, down from 488,000 hogs a week ago, the USDA said. Maintenance and labor issues have slowed slaughtering this week, analysts said. On Monday, processors killed about 462,000 hogs, down from 483,000 hogs a week ago.
In China, the world's biggest pork producer and consumer, most-active hog futures jumped as plunging temperatures and a shrinking herd size fueled buying.
(Reporting by Tom Polansek in Chicago; Editing by Shinjini Ganguli)
