Fund buying boosts U.S. hog futures

Chicago Mercantile Exchange hog futures climbed Thursday, driven by fund buying and short-covering on the eve of the last trading day of the month, traders and analysts said.

Investors also adjusted positions ahead of the Sept. 2 Labour Day holiday, traders said.

CME hogs gained almost 1.4 per cent, their biggest one-day percentage increase since 2.1 per cent on July 23.

October futures’ discount to CME’s hog index, which was at 95.14 cents, generated more buying interest.

October hogs finished 1.275 cents higher at 87.325 cents per pound while December settled 1.15 cents higher at 84.3 cents (all figures US$).

Hog futures gained traction despite ambivalence about cash hog and wholesale pork prices in the near term.

“The discount is being cut down to size significantly, which is going to make that moot since we are talking about the price of hogs in October, not late August,” independent livestock futures trader Dan Norcini said.

The U.S. Department of Agriculture on Thursday morning quoted the average hog price in the western Midwest up 94 cents per hundredweight (cwt) at 88.84 cents, but it quoted prices $1.41 lower at $86.39 in the eastern Midwest region.

Thursday morning’s government data showed the wholesale pork price, or cutout, at $96.97/cwt, up 77 cents from Tuesday. The cutout was largely driven by the $5.55 jump in ham prices.

Packers are pressuring cash hog bids amid a seasonal bump in supplies. Processors have all the hogs they need before shutting down plants for Monday’s holiday.

And supermarkets are reluctant to book big orders of pork until they determine how product moved over the three-day holiday weekend, the last grilling holiday of the summer.

Cash ideas support live cattle

Short-covering and anticipation of cash trading at a minimum of steady with last week underpinned CME live cattle, analysts and traders said.

Cash cattle bids in Texas and Kansas inched up to $122/cwt from $121 against $125 and higher asking prices, feedlot sources said.

Last week, cash cattle traded mostly $123/cwt in Texas and Kansas, and $125 in Nebraska.

Packers who raised cash bids in the southern Plains suggested they may need cattle, even though processors are buying supplies for the holiday-shortened week.

Packers will be careful about how much they spend for cattle given more of them are available for sale this week and beef appeared to have waned.

USDA Thursday morning reported the wholesale choice beef price, or cutout, at $195.88/cwt, down 40 cents from Wednesday. Select cuts dropped 98 cents to $183.42.

Spot August live cattle, which will expire on Aug. 30, ended up 0.25 cent to 123.55 cents/lb. Most-actively traded October closed up 0.050 cent to 126.975 cents.

CME feeder cattle followed the firm live cattle market.

Spot August feeders expired from trading at noon CT, settling up 0.325 cents/lb. at 155.05 cents. That was nearly in line with CME’s feeder cattle index at 154.76 cents.

September, the new lead month, finished 0.3 cent higher at 156.225 cents and October at 158 cents, 0.375 cent higher.

— Theopolis Waters reports for Reuters from Chicago.

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