CHICAGO, Feb 23 (Reuters) - Chicago Mercantile Exchange (CME) cattle futures rallied on Friday, as funds continued to flock into the market and the cost of feed prices fell sharply, market analysts said.
CME feeder cattle futures saw strong support from Chicago Board of Trade corn futures dipping below $4 per bushel in the front-month contract for the first time since November 2020, as hefty U.S. and global supplies weighed over the market.
Improving weather in the Plains is fueling demand for feeder cattle in the cash market, as producers can put the animals on grass fields to graze and put on weight relatively cheaply, said Dan Norcini, an independent livestock trader.
"There is a real bidding war that's happening for feeders right now," Norcini said, noting tight U.S. cattle supplies also underpinned the cattle market.
After the close of trading, the USDA said in its monthly Cattle on Feed report that there were nearly 11.8 million cattle on feed for slaughter on Feb. 1, up 0.37% from a year earlier.
Placements of cattle in feedlots during January totaled 1.79 million head, down 7.4% from 2023.
Ahead of Friday's monthly report, analysts surveyed by Reuters on average expected the government to report that placements of cattle into U.S. feedlots during January fell 11.6% from a year earlier.
While the report was more bearish than the market was expecting, Norcini said, "overall, it confirms what the trade was expecting: that the supply of feeders is going to be tight."
CME April live cattle settled up 1.350 cents at 187.900 cents per pound.
March feeder cattle futures ended up 2.525 cents at 254.575 cents per pound, while most-active April closed up 3.275 cents at 259.975 cents per pound.
Hog futures mostly rose on Friday for a seventh straight session, fueled by strong cash hog prices, traders said.
CME April lean hogs settled unchanged at 87.200 cents per pound, while June hogs ended up 0.450 cent at 99.375 cents. (Reporting by P.J. Huffstutter; Editing by Shailesh Kuber)
