CHICAGO, Aug 20 (Reuters) - Chicago Mercantile Exchange live cattle futures closed higher on Tuesday for a second session, supported by strong wholesale beef demand ahead of the U.S. Labor Day holiday weekend, analysts said.
Retailers are stocking their meat cases this week ahead of the Labor Day holiday on Sept. 2, while a Tyson Foods Inc slaughterhouse in Holcomb, Kansas, has been shuttered due to an Aug. 9 fire.
“So you had strong demand on the wholesale end, and then you tightened supply by Tyson being offline,” said Alan Brugler, president of Brugler Marketing & Management.
The U.S. Department of Agriculture on Tuesday quoted choice boxed beef cutout BEEF-US-CH at $241.70 per cwt, up $2.57 from Tuesday and the highest in more than two years. Select cutout fell $0.25 to $214.27, but was up from $200.58 per cwt a week ago.
As a result, strong beef packer margins “give them (processors) incentive to kill more cattle, which solves some of the problem of Tyson being shut down,” Brugler said.
CME live cattle futures tumbled last week as news of the Tyson fire threatened to curb demand for fat cattle. But the market rallied on Monday after government data showed that last week’s U.S. cattle slaughter came in above expectations, despite the loss of the Kansas plant.
On Tuesday, CME October live cattle futures ended up 1.775 cents at 100.000 cents per pound, and October feeder cattle settled up 0.475 cent at 133.650 cents per pound.
Live cattle futures drew additional support from expectations of higher cash cattle trade this week, given rising beef cut-out values, Brugler said. Cash cattle traders from $105 to $107 per cwt last week.
CME lean hog futures rose on Tuesday for a second straight session but stayed inside of last week’s trading range.
CME October hogs settled up 0.950 cent at 64.975 cents per pound. (Reporting by Julie Ingwersen; Editing by Tom Brown)