Marshall Eckblad, Dow Jones  |   August 22, 2011

CHICAGO (Dow Jones)--U.S. live cattle and lean hog futures both shrugged off bearish signals on Monday and rose in trading during broad strength in stocks and commodities.

Chicago Mercantile Exchange cattle for August delivery rose 0.4 cent, or 0.4%, to $1.147 a pound. CME October cattle rose 0.25 cent, or 0.2%, to $1.1575 a pound. Feeder cattle for August rose 0.2% to $1.336 a pound.

The Dow Jones Industrial Average was recently up 79 points to 10896 after it fell 15% during a prolonged four-week sell-off. Crude rose 2.3% to $84.12 a barrel. Corn for December rose 1.3% to $7.34 1/2 a bushel at the Chicago Board of Trade.

Cattle futures rose broadly even as investors digested a Friday cattle-on-feed report from the U.S. Department of Agriculture that showed July placements, or the number of young cattle added to feedlots, were 22% above the same time last year and higher than analysts expected. Marketings, or the number of cattle sent to slaughter, were also above expectations. Taken alone, higher placements signal a coming growth in supplies as feedlots are likely to sell more animals this autumn and winter.

The sky-high placements are a direct result of the massive drought in the Southern plains that has more recently spread hot, dry weather to states farther north, like Nebraska. The trend points to an eventual tightening of supplies next year as producers who sold animals this summer have fewer animals to sell.

How far supplies tighten next year could depend in large part on whether rainy weather returns to the South this fall. If the drought fades, "some of these cattle could move back home," said Steve Meyer and Len Steiner, publishers of the CME Daily Livestock Report. That's because ranchers there would have incentive to buy back cattle in order to rebuild their herds more quickly and take advantage of solid profit margins, thanks in large part to still-soaring U.S. beef exports.

Cash cattle markets were quiet Monday as packers had sufficient supplies for early-week slaughter schedules.

Bids were unestablished and offers were mostly 2 cents a pound above last week's prices.

Offers were from $1.15 to $1.16 a pound for live animals in Nebraska after cattle traded there last week at $1.12 to $1.145.

Offers in the South were mostly at $1.16 with some at $1.17 after prices there last week were mostly at $1.13 to $1.14.

The USDA's choice boxed-beef prices at midday were up 54 cents to $187.33 per hundredweight. Select prices fell $1 to $182.69 on 97 loads.

The latest HedgersEdge packer margin index was plus $57.75 a head, compared with plus $51.55 as calculated Friday. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.