CME hogs climb on futures’ discount to cash prices

Chicago Mercantile Exchange hogs rose for a third consecutive session, driven by futures’ discount to cash hog prices, traders and analysts said.

CME spot-August hogs followed the exchange’s hog index at 102.23 cents into the spot-month expiration at noon CT. The contract closed at 102.425 cents per pound, or up 0.625 cents (all figures US$).

Most-actively traded October led advances due to its sizable discount to CME’s hog index. That contract settled 1.625 cents higher at 88.15 cents.

December finished at 84.675 cents, 1.425 cents higher.

“I’m actually surprised that October futures held up given the likelihood of a seasonal increase in hog numbers pressuring cash prices,” Linn Group analyst John Ginzel said.

Hog numbers are expected to rise as cooler weather heading into the fall quickens animal weight gains. And wholesale pork prices could come down after grocers buy all the product they need for the Labour Day holiday.

The Sept. 2 Labour Day holiday is considered the last holiday of the U.S. summer grilling season.

U.S. Department of Agriculture data on Wednesday afternoon showed the wholesale pork price on a plant-delivered basis at $103.14 per hundredweight (cwt), which was $1.17 lower than on Tuesday.

Separate USDA data showed the average hog price at the closely watched Iowa/Minnesota market on Wednesday afternoon at $98.17/cwt, down $1.51 from Tuesday.

Beef prices underpin cattle

CME live cattle futures posted gains for a third day in a row with wholesale beef prices moving higher, said traders and analysts.

The government on Wednesday afternoon reported the wholesale price, or cutout, of choice beef surged $2.03/cwt from Tuesday to $192.35. Select cuts rose $1.40 to $184.70. Supermarkets are stocking meat cases in preparation for the upcoming Labour Day holiday.

Investors look for improved wholesale beef values, and less cattle up for sale, to lift prices for cattle in the cash market.

Cash cattle bids in the U.S. southern Plains were at $119/cwt against $123-$124 asking prices, feedlot operators said.

Last week, cash cattle in Texas and Kansas moved at $121/cwt. Live-basis cattle in Nebraska traded at $123.50 a week ago.

August live cattle futures closed up 0.1 cent at 124 cents/lb. and October settled at 128.175 cents, a gain of 0.1 cent.

The rise in corn prices and profit taking weakened CME feeder cattle.

August feeders closed at 153.6 cents, down 0.25 cent/lb. September closed down 0.25 cent at 157.45 cents.

— Theopolis Waters reports for Reuters from Chicago.

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