Chicago Mercantile Exchange (CME) cattle futures rallied on Tuesday on rising wholesale beef prices and as chart-based buying lifted prices out of a recent narrow range, reported Reuters.
The market was further supported by perceptions that consumer demand for beef would remain resilient amid rising equities markets, a downturn in crude oil prices and waning expectations of a Federal Reserve interest rate hike later this month.
"I'm hanging this rally on the stock market today, and the perception that we may not get this interest rate rise at the next Federal Reserve meeting here at the end of the month," said Rich Nelson, chief strategist at Allendale Inc.
Wholesale beef prices jumped sharply on Monday and again at midday on Tuesday, and beef packer margins swelled.
The US Department of Agriculture quoted the choice boxed beef cutout at $378.93 per hundredweight on Tuesday, up 67 cents from a day earlier.
The average beef packer margin on Tuesday expanded to $108.85 per head, up from $59.65 on Monday, according to livestock marketing advisory service HedgersEdge.
Actively traded CME December live cattle jumped 4.125 cents to settle at a three-week high of 224.100 cents per pound. November feeder cattle gained 8.150 cents to close at 338.275 cents per pound, the contract's highest point since mid-July.
Technical buying accelerated gains in both markets as prices broke through chart resistance at key moving averages and recent highs.
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