CHICAGO, July 18 (Reuters) - Chicago Mercantile Exchange live cattle futures extended gains on Tuesday on worries over limited U.S. supplies.
Recent strength in cash prices for cattle helped to support futures, analysts said, after ranchers shrank their herds due to drought and high feed costs.
Analysts said there is chatter in the market that high cattle prices and tight supplies will drive meatpackers to reduce slaughtering hours at some processing plants.
"It will be challenging, even with cutting slaughter, to break cash fed cattle prices," Cassie Fish, an analyst and industry expert, said on The Beef blog.
August live cattle futures settled up 1.15 cents at 181.275 cents per pound, a record closing price for the contract. October live cattle rose 1.3 cents to end at 183.550 cents per pound, another record closing price.
Recent activity in futures show the market's bias is to move even higher, a commodity broker said.
"Every dip has been bought," he said.
In the wholesale market, prices for select cuts of boxed
beef rose $0.87 to $276.71 per hundredweight (cwt), while prices
for choice cuts
Meatpackers were losing $18.80 for each head of cattle they processed, compared to profits of $29.80 a week ago, according to HedgersEdge.com.
"Packer margins have been pressed," StoneX said in a note. Talk about processing plants cutting hours "will remain a theme for multi-years as we work into tighter supplies," the broker said.
The U.S. Department of Agriculture will provide a supply update on Friday when it issues a bi-annual inventory report and separate monthly data about the number of cattle on feed. Analysts surveyed by Reuters estimate there were 2.3% fewer cattle on feed on July 1 compared to a year earlier.
In other markets, August feeder cattle fell 1.25 cents to 248 cents per pound. August lean hogs rose 1.5 cents to 96.275 cents per pound. (Reporting by Tom Polansek; Editing by Shailesh Kuber)
