U.S. live-cattle futures fell Tuesday as concerns eased over the first major winter storm in the southern Plains.

Futures prices surged to the daily limit Monday as the storm took aim at southwestern Kansas, the panhandles of Texas and Oklahoma, and parts of Colorado and New Mexico. The storm was forecast to exit the region by midday Tuesday, with the effects on transportation and cattle weight gain expected to be limited.

Cattle for December delivery fell 0.35 cent, or 0.3%, to $1.208 a pound in trading at the Chicago Mercantile Exchange. The CME February contract fell 0.5 cent, or 0.4%, to $1.121 a pound. January feeder-cattle futures fell 0.82 cent, or 0.6%, to $1.4385 a pound.

Traders key on winter-storm conditions because snow, wind and frigid temperatures can slow the weight gain of cattle and increase the risk of death. But futures pulled back Tuesday as the storm dissipated even as U.S. markets broadly rallied in morning trading.

John Ginzel, analyst with Linn Group, said prices were correcting after an overreaction Monday to the weather situation.

Parts of southwest Kansas received up to a foot of snow, while totals in many areas of the Oklahoma and Texas panhandles were less. The southern Plains may see additional snow on Thursday, but it won't be accompanied by strong winds, according to private weather firm Telvent DTN.

"Strong winds and blowing snow continue through key feedlots of southwest Kansas and the Texas Panhandle this morning, but conditions should improve this afternoon," the firm wrote in a morning forecast.

In cash-cattle markets, the blizzard-like conditions have caused road closures and resulted in reduced slaughter schedules Monday. Some plants are expected to be affected again Tuesday due to road closures in the region.

Cattle struggle under cold, wet conditions and could lose weight in the near term. Feedyard workers will be busy clearing snow from the facilities and making sure the animals have sufficient feed and water.

Trading may be affected later in the week as holiday plant closures reduce demand and supplies are held back. Reduced slaughter schedules will be hard to make up as plants close for Christmas, leaving packers not needing to buy as many cattle. Feedlots might delay selling to give animals time to regain weight.

No bids or asking prices have been reported yet and may not be available until later Tuesday or Wednesday.

Sales prices last week were mostly at $1.19 a pound live basis in Texas/western Oklahoma and $1.18 in Kansas. In Nebraska, live prices were mostly from $1.19 to $1.20 a pound while dressed sales were mainly at $1.94 a pound.

The latest HedgersEdge packer margin index was minus $11.40 per head, compared with minus $14.20 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.

The U.S. Department of Agriculture reported choice-beef prices Monday up 43 cents at $190.18 a hundred pounds and select-beef prices up $1.17 at $173.93 a hundred pounds on sales of 184 loads.

-By Mark Peters and Curt Thacker, Dow Jones Newswires; 312-750-4141; mark.peters@dowjones.com
(END) Dow Jones Newswires
December 20, 2011 10:47 ET (15:47 GMT)
DJ US CATTLE: Futures Pull Back As Winter-Weather Concerns Ease->copyright