Chicago Mercantile Exchange hog futures rose on Tuesday in response to sharply higher wholesale pork prices, traders and analysts said.
The U.S. Department of Agriculture’s Tuesday morning mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $102.02 per hundredweight (cwt). The price jumped $2.73 from Monday to its highest since July 10, when it touched $102.36.
“Product prices fell about $8 or $10 in the past week or so which may have attracted buying by end users,” R.J. O’Brien hog futures trader Tom Cawthorne said.
Cooler temperatures could rekindle grilling demand hurt by last week’s heat wave that blanketed much of the United States, analysts and traders said.
Spread traders bought hog futures and sold deferred contracts as corn prices drifted lower. Less-costly corn may cause livestock producers to feed more animals and fatten them to heavier weight.
CME August futures were at a discount to the exchange’s hog index at 101.03 cents, which encouraged buyers.
August hogs closed at 99.175 cents per lb, or 2.050 cents higher and October at 86.325 cents up 1.050 cents.
LIVE CATTLE GAIN AS SPECS BUY
Speculative buying in anticipation of a seasonal uptrend in cash cattle prices, traders and analysts said.
USDA’s monthly cattle-on-feed report last Friday confirms overall tighter cattle numbers in the coming months, said Oak Investment Group president Joe Ocrant.
Bearish spreads and lower wholesale beef prices limited August futures’ advances.
Government data on Tuesday morning showed the wholesale price of choice beef at $187.83 per cwt. The price was $2.57 lower than last week and well off its high so far this month at $198.08 on July 3.
Beef prices typically wane as hot weather curbs consumers’ appetites for heavier meals, an analyst said. Beef demand usually improves a few weeks before the Sept. 2 U.S. Labor Day holiday, the last grilling holiday of the summer, he said.
Investors wait for cattle in the cash market to change hands this week. Cash cattle last week moved at $119 to $120 per cwt, which was steady with the prior week.
Packers will avoid raising bids for cattle until wholesale beef prices move higher. Less cattle available for sale could underpin cash prices.
August live cattle finished at 121.900 cents, or up
0.025 cent per lb and October closed at 125.900 cents, or 0.300 cents higher.
CME feeder cattle spiked to a 7-month high driven by modest live cattle advances and lower-priced corn.
August closed at 153.600 cents, up 0.675 cent per lb and September at 156.625 cents, or 0.750 cent higher.