* Cattle futures, beef price gains stir cash optimism
* Feeder cattle follow live cattle to new high
* Cattle market lends hogs support, February expires
By Theopolis Waters
CHICAGO, Feb 14 U.S. live cattle futures
rose to an all-time high on Tuesday, as a devastating
drought has reduced supplies, forcing investors to cover short
positions taken last week when many thought the market had
Prices rallied to a record 126.90 cents per lb, with funds
active buyers on a day when traders shrugged off a surge in the
dollar, which dents exports, and an anemic stock market.
Spot February live cattle surpassed the Jan. 25 peak
of 126.37 cents, as wholesale beef prices rose for a third
straight day, boosting optimism that cattle will trade higher in
cash markets this week.
"You've got the shorts that tried to sell it last week and
tried to pick a top. And funds are pushing because they've got
this thing on the run again," Jim Clarkson of A&A Trading said.
A CME cattle trader said: "We could see steady to higher
cash because the showlists are a little light, and if futures
and the beef side hold together."
There were no reported cash bids or asking prices after
cattle last week in Nebraska and Kansas sold $1 per cwt lower at
mostly $123, but up $1 in Texas at $124.
Feedlot sources estimated the number of cattle available for
sale this week are down by nearly 22,000 head from a week ago.
Supplies have become scarce after a drought in the
southwestern United States last year forced younger cattle off
dried up pastures and into feedlots.
The resulting cattle shortfall, along with robust beef
exports and demand from retailers such as Wal-Mart for
choice beef, pushed cash cattle prices to a record high $127 per
cwt last autumn.
Retail beef prices hit record highs for the fourth
consecutive month in December, rising above $5.00.
Speculative bulls also took the cue from mending beef packer
Hedgersedge.com estimated beef packer margins for Tuesday at
a negative $40.30 per head, up $3.10 from Monday and a $27.50
improvement versus a week ago.
Cattle futures made headway despite a weaker stock market
and firmer dollar tied to disappointing U.S. retail sales data
and euro zone downgrade worries.
Funds that trade equities, and have commodities in their
portfolios, typically buy or sell across a wide spectrum of
those assets depending on the stock market's direction.
A strong dollar usually deters foreign purchases of U.S.
Spot February live cattle closed up 1.125 cents, or
0.90 cent, at 126.650 cents per lb. Benchmark April
ended 1.125 cents higher, or 0.88 percent, at 129.250 cents.
Feeder cattle rose to a record 156.800 cents,
prompted by live cattle advances, short-covering and technical
March settled up 1.525 cents, or 0.99 percent, at
CATTLE HELP HOGS, FEBRUARY EXITS
CME hogs gained slightly on short-covering and spillover
support from live cattle.
Those who traded spot February tracked its relationship to
CME's hog index at 87.46 cents before the contract expired at
February settled up 0.125 cent per lb, or 0.14
percent, at 87.100 cents.
Soon after spot February made its exit, benchmark April
abruptly jumped on spreading into that contract out of the spot
Fund buying emerged after April broke through 88.41-cents
20-day and 89.10-cents 10-day moving average resistance levels.
April garnered additional supported from higher wholesale pork
prices as some retailers looked ahead to spring grilling.
April closed 1.650 cents higher, or 1.88 percent, at