Chicago Mercantile Exchange hog futures on Tuesday rose in anticipation of hot weather in the U.S. Plains pushing up cash hog prices, traders and analysts said.
Hot humid weather tends to slow hog weight gains, resulting in fewer animals available for packers and less fresh pork for grocers.
CME’s hog index, at 102.51 cents, fueled August buying. And nearby hog futures led advances, driven by short-covering and fund buying.
August closed 0.750 cent higher at 96.300 cents, above the 10-day moving average of 95.970 cents.
October finished 0.650 cent higher at 85.350 cents, above the 20-day moving average of 85.138 cents.
Futures climbed despite packers cutting cash hog bids to improve their margins. Also, high heat and humidity dampened outdoor cookouts, which pressured the pork cutout.
U.S. Department of Agriculture data showed the average hog price on Tuesday morning in the most-watched Iowa/Minnesota hog market at $95.88 per hundredweight (cwt), $1.84 lower than on Monday.
Tuesday morning’s USDA mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $101.00 per cwt, down 10 cents from Monday.
Tuesday’s Chicago Board of Trade corn price spike generated deferred-month hog futures buying. Expensive corn may cause producers to feed fewer animals and nourish them to lighter weight. The prospect that the deadly Porcine Epidemic Diarrhea (PEDv) virus could reduce hog supplies this winter underpinned the December 2013 contract, traders and analysts said.
Live cattle down with beef demand
Sluggish wholesale demand and cash cattle price uncertainty dragged on CME live cattle, said analysts and traders.
The government Tuesday morning reported the wholesale price of choice beef at $190.40 per hundredweight (cwt), down 30 cents from Monday. Select cuts slipped 14 cents to $183.80.
“We’re in the summer doldrums where heat is hurting beef demand. And we should get into bigger cattle supplies in the short-term,” U.S. Commodities analyst Don Roose said.
Packer margins are profitable enough to underpin cash prices. But slowed wholesale beef demand might force processors to cut slaughter rates and reduce cash spending.
There were no cash cattle bids or asking prices reported by feedlot sources. Cash cattle last week in the U.S. Plains moved at $119 to $120 per cwt, steady with the week before.
August live cattle finished at 122.125 cents, down 0.325 cent per lb. October closed at 126.400 cents, or 0.275 cent lower.
Corn futures’ rally and profit-taking weighed on August CME feeder cattle. Firm deferred-month live cattle and prospects for tighter feeder cattle supplies lifted remaining contracts.
August CME feeder cattle closed at 152.550 cents, down 0.100 cent per lb.
September settled at 155.275 cents, up 0.125 cent, and October ended at 157.100 cents, or up 0.275 cent.