Commodities : Cattle Futures Prices Gain

Cattle futures prices advanced sharply Monday in reaction to a government report indicating fewer animals coming to market in the months ahead, with some contracts up the limit for daily trading.

On other markets, precious metals posted strong gains, most grain and soybean contracts were higher and energy futures declined.

Agriculture Department cattle on feed reports released Friday showed active marketing during December and far fewer animals placed on feedlots than had been expected.

“Generally speaking, the placements were so low that they shocked anybody who was short (in the futures market) into buying,” said Tom O’Hare, an analyst in New York with Smith Barney, Harris Upham & Co.

Traders shorting the market sell borrowed contracts in hope of buying them back later at a lower price and pocketing the difference.

If the expected declines do not materialize the trader must buy higher-price contracts to repay the borrowed ones, helping push prices even higher.