Most Chicago Mercantile Exchange hog futures finished weaker on Thursday with lower cash hog and wholesale pork prices, traders and analysts said.
The U.S. Department of Agriculture’s Thursday morning mandatory wholesale pork price, or cutout, was $102.70 per hundredweight (cwt). The price slipped 48 cents from Wednesday and fell six out of seven days (all figures US$).
Thursday morning’s average hog price in the most-watched Iowa/Minnesota market dropped 82 cents/cwt from Wednesday to $99.43.
Rising temperatures in sections of the country hurt grilling demand. And packers reduced cash hog bids to stabilize slipping operating margins.
Funds sold the August contract and bought deferred months guided by the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Funds that follow the S+PGSCI shifted their CME hog and live cattle August long positions mainly into October. Thursday was the fourth of five days for the process.
Most-actively traded August finished 0.425 cent lower at 95.275 cents and October ended at 84.25 cents, or down 0.35 cent.
CME’s hog index, at 103.36 cents, encouraged thinly traded spot-July futures’ buyers. The contract expires on July 15.
Spot July hogs closed up 0.25 cent/lb. to 102.175 cents.
Funds stir mixed live cattle
The shift by funds tied to the S+PGSCI weighed on CME live cattle August futures and underpinned the October contract.
August live cattle closed down 0.150 cent/lb. to 121.925 cents. October ended at 126.425 cents, or up 0.05 cent.
Cash cattle price uncertainty resulted in a choppy futures trade.
Cash cattle bids in Texas and Kansas stood at $117/cwt against asking prices of $121 and higher, said feedlot sources. Cash-basis cattle last week in the U.S. Plains traded at $119 to $120.50.
“The market is confused about cash prices in the short run given competing forces,” said Doane Advisory Services economist Dan Vaught.
He cited the typical lull in beef demand after the U.S. July 4 holiday. Sluggish beef movement could pressure cash prices and cause packers to cut slaughter rates.
The government’s Thursday morning data showed the wholesale price of choice beef at $193.11/cwt, up 0.04 cent from Wednesday. Select cuts dropped 92 cents to $185.13.
Contrarily, Vaught said the U.S. dollar’s retreat and Wall Street’s steep climb on Thursday bode well for beef demand, a supportive cash cattle factor.
Chicago Board of Trade corn recovered from a volatile session that later pulled down CME feeder cattle. Expensive feed could reduce feedlot demand for younger cattle.
CBOT corn bounced back on concerns about outlooks for drier weather. Corn prices initially stumbled following USDA forecasts for record corn production ahead.
August CME feeder cattle closed at 150.125 cents, or down 0.425 cent per lb. September finished 0.575 cent lower at 152.550 cents.
— Theopolis Waters reports for Reuters from Chicago.