U.S. live cattle futures rebounded on Friday with fund buying and short-covering offsetting lacklustre market fundamentals, said analysts and buyers.
Chicago Mercantile Exchange live cattle rose almost one per cent for the week despite tepid wholesale beef demand and futures' premium to prices for cattle in the cash market.
"We've been watching the strength this week in futures going directly against bearish short term fundamentals. We are thinking this market is looking ahead at lower supplies in 2013," said Rich Nelson, chief strategist at Allendale Inc.
Spot December cattle closed up 0.7 cent per pound to 126.9 cents. Most actively traded February ended 1.125 cent higher at 132.6 cents (all figures US$).
A small number of cash cattle in the southern Plains traded at $124 to $124.50 per hundredweight (cwt), steady to up 50 cents from last week, said feedlot sources.
They said no cattle were sold in Nebraska where bids stood at $122 to $123 against $126 asking prices.
The wholesale price for choice beef Friday morning was $194.27/cwt, down 24 cents from Thursday; the select price was $175.19, 49 cents lower, according to the U.S. Department of Agriculture.
Cash cattle prices were in line with expectations as packers bought sparingly on the open market while cutting slaughter rates to realign their margins.
An estimated 632,000 head of cattle were processed this week, down 7,000 from a week earlier and 12,000 less than during the same period a year ago, said USDA.
HedgersEdge.com put the average beef packer margin for Friday at a negative $29.38 per head, compared with a negative $26.18 on Thursday and a negative $62 on Dec. 7.
Nearby CME feeder cattle were pressured by profit taking and higher corn prices. Live cattle's climb pulled up remaining feeder cattle contracts.
Feeder cattle futures jumped up three per cent for the week.
January and March closed down 0.05 cent/lb. to 153.075 and 155.025 cents, respectively. April ended 0.35 cent higher at 156.35 cents and May up 0.325 cents to 157.6 cents.
Hog futures moved lower as investors took profits while waiting for market direction following the December contract's expiration today at noon CST, according to analysts and traders.
CME hogs were down marginally for the week.
Spot December hog futures settled at 82 cents/lb., down 0.125 cent. Most actively traded February finished at 85.4 cents/lb., 0.5 cent lower.
"February is now at a premium to cash after December went off the board, so we're feeling out cash's next move with the holidays coming up," a trader said.
Early Friday, the government quoted the average price for hogs in the most-watched Iowa/Minnesota direct market at $82.50/cwt, $3.27 higher than Thursday.
Some believe packers may hike cash bids into early next week to bolster inventories before plants shut down during the Christmas and New Year's holidays.
Others contend sufficient supplies of hogs in the near term would limit packer needs for supplies.
-- Theopolis Waters writes for Reuters from Chicago.