CME hog futures slump amid profit-taking

Chicago Mercantile Exchange hog futures settled lower on Wednesday as traders took profits in anticipation of cash hog and wholesale prices peaking soon, traders and analysts said.

Spot August hogs finished nearly in line with CME’s lean hog index, which was at 100.71 cents. The spot month eased from a new contract high on Wednesday of 101.325 cents.

Spot August hogs closed at 100.225 cents per pound, or down 0.325 cent. Most-actively traded October ended at 84.925 cents, 1.525 cent lower.

“I think people are looking at the tightness in available pork supplies being a temporary situation,” said independent livestock futures trader Dan Norcini.

The U.S. Department of Agriculture reported Wednesday morning’s wholesale pork price, or cutout, at $105.12 per hundredweight (cwt), down 43 cents from Tuesday. The higher price for pork bellies, which are made into bacon, limited the cutout’s losses.

Separate USDA data showed the average hog price at the closely watched Iowa/Minnesota market Wednesday morning at $101.69/cwt, up $1.25 from Tuesday.

Packers may lower cash hog bids after buying what they need for this week’s slaughter. Packing plants that were closed on Monday for a floater holiday will ramp up Saturday’s kill to make up for Monday’s downtime.

A major pork processor is scheduled to be closed on Friday due to tight hog supplies, according to traders and analysts.

USDA’s monthly export data showed June U.S. pork shipments at 398.9 million lbs., down 7.4 per cent from May and down one per cent versus a year ago.

“It’s no secret that Russia’s continued ban on U.S. pork over worries about the feed additive ractopamine hurt our exports,” a trader said.

Cattle mixed on spreads

CME live cattle settled mixed after a choppy day of trading.

Speculation that higher wholesale beef prices may prompt packers to spend more for cattle stirred bullish spreads, traders and analysts said.

They said those spreads and profit-taking pressured deferred cattle contracts.

USDA on Wednesday morning quoted the wholesale price of choice beef at $188.66/cwt, $1.49 higher than Tuesday. Select cuts rose 59 cents to $181.49.

Cash cattle bids surfaced in the southern Plains at $117/cwt with no response from sellers, feedlot sources said.

Last week, cash cattle in Texas sold at $119/cwt and mostly at $119 in Kansas, with some at $120. Most live-basis cattle in Nebraska last week moved at $120.50.

Investors bought declines and sold into rallies as the market fluctuated on either side of key moving average support and resistance levels.

August live cattle futures ended up 0.3 cent at 121.225 cents/lb. It closed below several moving averages, with the closest being the 10-day at 121.277 cents.

October closed unchanged at 124.675 cents. It ended below where the 10-, 40- and 100-day moving averages converged at 125.142 cents.

June beef exports were at 234.3 million lbs., up eight per cent from the prior month and a 12 per cent increase from last year, according to USDA data.

The growth in U.S. beef exports was mainly led by renewed beef shipments to Japan, said analysts.

Fund selling and profit-taking sank CME feeder cattle.

August feeders closed at 152.575 cents, down 1.675 cents/lb., while September closed at 156.375 cents, 1.275 cents lower.

— Theopolis Waters reports for Reuters from Chicago.

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