Lower cash prices weaken U.S. hog futures

Chicago Mercantile Exchange hogs dropped Tuesday as lower cash prices stirred profit-taking, traders and analysts said.

They said anticipation of wholesale pork prices about to top out contributed to CME hog futures’ selling.

“We’re evolving to where consumers are getting saturated with pork and those prices are inching higher,” EBOTTrading.com senior analyst John Kleist said.

And hot humid summer weather is approaching which traditionally hurts meat demand for outdoor cookouts, he said.

U.S. Department of Agriculture data showed the average hog price on Tuesday morning in the western Midwest hog market at $96.15 per hundredweight (cwt), $3.56 lower than on Monday (all figures US$).

Tuesday morning’s USDA mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $108.10/cwt, up 20 cents from Monday.

Supermarkets are close to completing pork purchases for U.S. Independence Day holiday demand. And more hogs are available as seasonally tight hog supplies near an end.

Investors are also monitoring the porcine epidemic diarrhea virus’ (PEDV) spread in the U.S., where it’s now been found at 199 sites in 13 states, according to researchers at veterinarian diagnostic labs.

They said the total number of pig deaths from the outbreak, since the first PEDV cases in the U.S. were confirmed May 17, is not known.

CME July hogs settled 0.8 cent per pound lower at 100.15 cents and August settled down 0.325 cent to 97.7 cents.

Two-sided live cattle

CME live cattle settle narrowly mixed following a choppy day of trading, analysts and traders said.

They said recent CME live cattle gains and futures’ upside breakout of its trading range suggests the market has bottomed out.

Conversely, slowed wholesale beef demand and steady-to-weak cash price expectations prompted selling into futures’ advances.

There were no cash bids or asking prices reported by feedlot sources. Cash-basis cattle last week sold at $120/cwt.

Fewer cattle are up for sale this week. But packers will not need as many cattle with plants scheduled to be closed at least one day for the July 4 U.S. holiday.

The government’s Tuesday morning data showed the wholesale price of choice beef at $198.41/cwt, which was 84 cents lower than on Monday. Select cuts rose 33 cents to $186.91.

Beef demand could mount a comeback later this summer and early fall as the weather moderates and consumers tire of eating pork, said EBOTTrading.com’s Kleist.

Spot-June live cattle, which will expire on Friday, finished up 0.2 cent/lb. to 121.15 cents.

Most actively traded August closed down 0.05 cent to 121.125 cents.

CME feeder cattle moved in tandem with mixed live cattle futures.

August settled up 0.2 cent/lb. to 147.875 cents, and September was at 150.075 cents, down 0.025 cent.

— Theopolis Waters reports for Reuters from Chicago.

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