LIVESTOCK-Cattle futures higher on dwindling cattle supply

By Heather Schlitz

CHICAGO, Feb 2 (Reuters) - CME live and feeder cattle futures ended higher on Monday under support from the ever-tightening cattle supply and expectations that the U.S.-Mexico border will remain closed to the import of cattle due to a mounting number of screwworm cases in northern Mexico.

On Friday, the U.S. Department of Agriculture said in a biannual report the U.S. cattle herd had fallen to its smallest size since 1951, signaling beef prices will stay high for consumers after setting records last year.

The nation had 86.2 million cattle and calves as of January 1, the USDA said in the report, after a persistent drought drove ranchers to slash their herds. That was down 0.4% from a year earlier, when the herd also hit its lowest level since 1951.

"The confirmation that producers have not started an expansion in a serious way and that we're still having declines in the beef cattle herd is still a bit of a concern," said Rich Nelson, chief strategist at Allendale.

During a Monday morning earnings call, Tyson CEO Donnie King reaffirmed to analysts that the meatpacking giant expects cattle supplies to remain tight through 2027.

Market players meanwhile are keeping a close eye on the spread of screwworm in Mexico as it inches closer to the U.S.-Mexico border.

CME April live cattle LCJ26 finished 2.725 cents higher at 239.525 cents per pound, while March feeder cattle FCH26 finished up 6.075 cents at 366.35 cents per pound.

CME April lean hogs LHJ26 settled 1.475 cents higher at 96.625 cents per pound.

The USDA priced choice boxed beef at $367.70 per hundredweight (cwt) as of Monday morning, up $2.14 from the previous day, and select boxed beef at $364.29 per cwt, up $2.35.