Aside from spot-June Chicago Mercantile Exchange hog futures, other contracts on Thursday sagged on profit taking following an 11-day winning streak, traders and analysts said.
Slipping wholesale pork prices and unprofitable packer operating margins suggest CME hogs are close to topping out in the near term, they said.
Thursday afternoon’s mandatory wholesale pork price data, or cutout, calculated on a plant-delivered basis, was at $100.16 per hundredweight (cwt), down $1.10 from Wednesday, according to the U.S. Department of Agriculture (all figures US$).
HedgersEdge.com calculated U.S. pork packer margins on Thursday at a negative $9.45 per head, compared with a negative $7.10 on Wednesday and negative $5.35 a week earlier.
Still, higher cash hog prices lifted spot June CME hogs before it expires on Friday. Tight seasonal hog supplies caused packers to raise cash bids.
Government data showed the average hog price on Thursday afternoon in the most-watched Iowa/Minnesota market at $103.31/cwt, up $1.21 from Wednesday.
Packers bought hogs to fill out this week’s kill, a trader said. Processors have been cutting slaughter to offset reduced supplies and recoup lost margins, he said.
From Monday to Thursday, packers processed 1.593 million hogs, 24,000 less than a week earlier, based on USDA estimates.
July bore the brunt of the day’s losses as funds sold the contract and bought deferred months as dictated by the Goldman Sachs Commodity Index roll.
Funds that follow Standard + Poor’s Goldman Sachs Commodity Index shifted their July long positions into August. Thursday was the last official day of that roll.
CME spot-June hogs closed up 0.625 cents at 101.575 cents.
Most-actively traded July ended at 98.65 cents, or 0.525 cents lower, and August settled down 0.3 cent, to 97.3.
Cattle slide with beef
Slumping wholesale beef prices pulled down CME live cattle futures, traders and analysts said.
“Lofty choice beef prices last month got to a point where they killed demand,” a trader said.
USDA’s Thursday afternoon data showed the wholesale price of choice beef, or cutout, down $1.16/cwt to $200.63, while select cuts rose six cents to $184.37.
Eroding beef cutout values and increased cattle supplies this week backed expectations for lower cash cattle prices.
Spotty cash bids stood at $120/cwt with no asking prices reported by feedlot sources. A few cattle last week fetched $122 to $124.
June live cattle ended 0.3 cent/lb. lower at 119.85 cents and August dropped 0.45 cent to 119.075 cents.
Profit taking and the lower live cattle market pressured CME feeder cattle.
Spot August settled down 0.45 cent/lb. to 145.475 cents and September was at 147.75 cents, or
0.175 cent lower.
— Theopolis Waters reports for Reuters from Chicago.