U.S. live cattle futures gained modestly on Thursday as investors adjusted positions before the U.S. Department of Agriculture's monthly cattle-on-feed report on Friday, analysts and traders said.
Analysts polled by Reuters expect the report to show U.S. cattle placements in October fell 12.6 per cent.
Investors also priced in a potential cash cattle market trade this week of around $125 per hundredweight (cwt), compared with $125-$126 last week (all figures US$).
Bids for cash-basis cattle in the U.S. Plains surfaced at $122-$123 against sellers asking $128-$129, feedlot sources said.
Packers are reluctant to spend more for cattle because of their unprofitable margins and tepid wholesale beef demand.
The Thursday morning wholesale beef price was $193.03/cwt, down 19 cents from Wednesday, and select cuts dropped $1.15, to $173.15/cwt, according to USDA.
HedgersEdge.com put the average beef packer margin for Thursday at negative $63.75 per head, compared with negative $63.95 on Wednesday and negative $68.55 on Nov. 8.
Processors will also need fewer cattle for next week with slaughter schedules shortened by at least one workday by the U.S. Thanksgiving Day holiday on Nov. 22.
"It's just been a choppy trade all day with December and February trading on either side of their moving averages," said Oak Investment Group president Joe Ocrant.
Both contracts settled above their respective 10-day moving average support level of 125.46 and 129.27 cents respectively.
December live cattle closed up 0.175 cent per pound at 125.600. February ended at 129.375 cents, 0.25 cent higher.
Feeder cattle at the CME firmed while drawing support from modest live cattle market gains and weaker corn prices which eased feed costs.
Spot November settled at 143.4, up 0.2 cent/lb. It expired from trading at noon CST nearly par with the CME feeder cattle index at 143.2 cents.
January, the new lead month, finished at 145.15 cents, 0.275 cent higher.
CME hogs settled narrowly mixed with December weighed down by lower prices for hogs in the cash market, analysts and traders said.
They said February futures benefited from investors who bought that contract and sold December and deep-deferred months on spreads.
December hogs settled off 0.025 cent/lb. at 80.075 cents. February closed at 86.15 cents, up 0.1 cent.
Packers lowered bids for cash hogs after topping off inventories heading into the holiday week.
The number of hogs available for slaughter remains relatively high as producers move animals to market prior to plant closures during next week's holiday.
The average hog price in the most-watched Iowa/Minnesota market Thursday morning fell $1.25/cwt from Wednesday to $74.63, USDA said.
The government estimated Thursday's hog slaughter at 434,000 hogs, which was the same as a week earlier and 5,000 more than the same period a year ago.
-- Theopolis Waters writes for Reuters from Chicago.