Cattle futures rose for the first time in three days on speculation that U.S. meatpacker demand for animals is outpacing available supplies.

The U.S. feedlot herd was 3.4% smaller on May 1 than a year earlier, USDA said. By tomorrow, meatpackers will have processed an estimated 12.9 million head of cattle this year, 1.2% more than a year earlier. Wholesale-beef prices have surged 21% this year as herds shrank and demand rebounded, boosting meatpacker profits.

“We continue to kill as many or more cattle as a year ago, with fewer cattle on feed,” said David Kruse, a commodity trading adviser at CommStock Investments Inc. in Royal, Iowa. “Packer margins are still excellent,” spurring processors to slaughter cattle earlier at lighter weights, he said.

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