Chicago Mercantile Exchange hogs Thursday slumped to a four-month low on profit taking following lower cash hog and wholesale pork prices, traders and analysts said.
The wide disparity between the new lead-month October contract and the spot August trading month, which expired on Wednesday at 102.425 cents, played a role in futures’ sizeable drop on Thursday (all figures US$).
CME hog October settled at 87.3 cents per pound, 0.85 cent lower. December finished at 84.025 cents, down 0.65 cent.
U.S. Department of Agriculture data on Thursday afternoon quoted the wholesale pork price, or cutout, at $102.71 per hundredweight (cwt), down 43 cents from Wednesday.
Separate USDA data showed the average hog price at the closely watched Iowa/Minnesota market on Thursday afternoon at $97.05/cwt, down 92 cents from Tuesday.
U.S. grocers are waiting for pork prices to come down before topping off inventories for the Sept. 2 Labour Day holiday, the last grilling holiday of the summer, said traders.
The seasonal increase in hog numbers afforded packers all the supplies they need for the rest of this week’s slaughter while pumping more pork into the retail sector.
From Monday to Thursday, packers processed 1.688 million hogs, 68,000 more than last week and 9,000 more than a year ago for the same period.
Profit-taking clips cattle
CME live cattle posted modest losses as traders took profits as they waited for cattle in the cash market to change hands, analysts and traders said.
August live cattle futures closed down 0.3 cent at 123.7 cents/lb. and October settled at 128.1 cents, off 0.075 cent.
“I was expecting some type of correction in the market after being up three straight days,” Oak Investment Group president Joe Ocrant said.
He said futures’ recent upswing and solid wholesale beef demand are supportive for cash cattle prices.
Cash cattle bids in the U.S. southern Plains were at $119/cwt, versus $123-$124 asking prices, feedlot operators said.
Last week, cash cattle in Texas and Kansas fetched $121/cwt. Live-basis cattle in Nebraska sold at $123.50 a week ago.
The government on Thursday afternoon reported the wholesale price of choice beef up 95 cents/cwt from Wednesday to $193.30. Select cuts climbed $1.01 to $185.71.
CME August feeder cattle drew support from higher prices for cattle in the closely watched Oklahoma City market.
Profit taking and modest live cattle futures losses weakened remaining feeder cattle contracts.
August feeders closed at 154.1 cents, 0.5 cent/lb. higher. September closed down 0.375 cent to 157.075 cents and October ended 0.5 cent lower at 159.35 cents.
— Theopolis Waters reports for Reuters from Chicago.