CHICAGO, June 4 (Reuters) - Chicago Mercantile Exchange (CME) feeder cattle futures rebounded on Tuesday as traders hoped that feed costs will remain under pressure following news U.S. buyers are importing corn from South America.
Both live cattle and lean hog futures also rose amid a rally in the U.S. stock market and forecasts of warming weather in the coming days, which is expected to bolster consumer demand for meat as the grilling season takes off, traders said.
The Chicago Board of Trade’s corn futures surged strongly in morning trade, after the U.S. Department of Agriculture reported U.S. planting was well behind the average pace for this time of year following repeated rainfall.
But the rally cooled a bit after Reuters reported that Archer Daniels Midland Co and other grain traders were selling Brazilian corn to Smithfield Foods Inc in the United States, where wet weather has reduced plantings.
One source said Smithfield Foods likely ordered between five and 10 corn shipments from Brazil, which are expected to be loaded onto ships between September and January.
Traders said livestock futures also rose on news that Brazil had temporarily halted beef exports to China following an atypical case of mad cow disease in leading farm state Mato Grosso, and that China plans to boost inspections of Canadian meat and meat product imports as bilateral trade relations deteriorate.
But the market moves on such news - particularly the Brazilian case of the bovine spongiform encephalopathy (BSE), detected in a 17-year-old cow - were more of a “knee jerk reaction than anything dealing with fundamentals,” said Dan Norcini, an independent livestock trader based in Idaho.
“The reality is, China needs the meat,” Norcini said. “There’s only so many places they can get this stuff from.”
Traders cautioned that live cattle prices could soften this week, including one who noted there were some limited cash sales of $113 per cwt in Texas, and $114 per cwt in Nebraska. But feedlots passed on packer bids of $112 per cwt in different Midwest locations, traders said.
August feeder cattle finished Tuesday up 3.95 cents at 137.45 cents per pound and September feeders settled up 3.75 cents to 137.875 cents.
June live cattle settled up 0.775 cent to 107.55 cents per pound, and most actively traded August closed up 1.25 cents to 104.05 cents.
CME June lean hogs closed down 0.45 cent at 81.125 cents per pound - narrowing the gap between the cash and futures markets - while most actively traded July hogs ended up 1.275 cents at 85.8 cents. (Reporting by P.J. Huffstutter; Editing by Tom Brown)