Cattle futures prices advanced strongly Thursday, with traders finding a bit of good news for a change in the government's whole-herd dairy buyout program.
The August delivery of feeder cattle closed 1 cent a pound higher and the live cattle futures contract for that month did almost as well. This comes after Wednesday's 1 1/2-cent limit declines at the Chicago Mercantile Exchange.
The rebound was sparked by a government report late Wednesday showing that the slaughtering of dairy animals was proceeding at a faster pace than expected, said Tom O'Hare, a livestock analyst in New York with Smith Barney, Harris Upham & Co. The Agriculture Department said 293,100 dairy cattle were killed from April 1 to May 3 under the buyout, which anticipates about 1 million head being slaughtered during this first 22-week buyout period.
There were fears that farmers might hold the animals as late as possible to continue milking or to fatten the heifers, O'Hare said, adding that the USDA data indicated the slaughter was about 60,000 animals ahead of where it would be if it were proceeding at an even pace.