CHICAGO, Jan 6 (Reuters) - U.S. live cattle futures jumped by as much as 2% on Monday and feeder cattle futures rose by up to 3%, propelled by strong cash market prices and tightening supplies of animals, analysts said.
A $2 jump in cash cattle prices at southern Plains feedlot markets late last week fueled buying in futures to open the week, along with robust beef demand and hopes for greater U.S. exports.
After a recent trade deal with top U.S. beef importer Japan, the U.S. Senate may vote on a refreshed regional pact with Mexico and Canada as soon as this week, solidifying access to three of the top five markets for U.S. beef.
The bullish outlook more than offset concerns about beef packer margins that narrowed to just $12 a head on Monday, from $34.45 a week ago and $171.05 per head a month ago, according to livestock marketing and advisory service HedgersEdge.com LLC.
“The cash market was positive (last week) and it will only get better. We’re now sliding down in supply to the year’s low, which will be in mid-February,” said Rich Nelson, chief strategist with Allendale Inc.
“There’s talk that the strong cow slaughter in recent weeks may give us a lighter supply of calves and feeders in future months,” he said.
Chicago Mercantile Exchange (CME) February live cattle futures jumped 2.550 cents to 127.275 cents per pound, breaking through technical chart resistance at its 20- and 50-day moving averages and ending at a three-week high. The contract’s 2% gain was the strongest in nearly four months.
Actively traded March feeder cattle climbed 3.675 cents to 146.350 cents per pound, a 2.6% jump that was the strongest in almost five months. The May through November contracts posted new all-time highs during the session.
CME lean hog futures ended mixed on Monday, anchored by concerns about the pace of pork purchases by China to date.
The United States and China are due to sign a Phase 1 trade deal next week that U.S. officials say will sharply increase Chinese imports of U.S. farm goods.
Most actively traded February lean hog futures ended up 0.075 cent at 68.625 cents per pound after tumbling by the daily 3-cent limit on Friday. April hogs shed 0.200 cent to close at 74.950 cents.
Reporting by Karl Plume in Chicago Editing by Sonya Hepinstall