Traders continue to digest government reports detailing scarce supplies of market-ready cattle after years of drought prompted ranchers to cull their herds.
The US Department of Agriculture (USDA) on Friday confirmed that the US cattle herd fell to 94.2 million head as of July 1, a record low for that date, while the number of cattle placed in US feedlots during June fell by 8% compared to a year earlier, a bigger-than-expected drop.
"There are just not enough cattle running around right now, and that is going to be the story for quite some time," said Dan Norcini, an independent trader.
"Open interest (in CME cattle futures) is increasing, and it tells me that the funds are piling back into cattle on the long side."
Wholesale beef prices cooled on Tuesday, with choice cuts priced at $364.19 per hundredweight (cwt), down $3.54 from Monday. Still, given that meat prices tend to decline in late summer, "beef demand seems to be holding up fairly well for this time of year," Norcini said.
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