U.S. hog futures spike, live cattle sag as funds roll

Chicago Mercantile Exchange hog futures spiked on Wednesday as funds sold the August contract and bought deferred months led 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. Wednesday was the third of five days for the procedure.

The CME’s hog index which was at 103.36 cents encouraged spot-July buyers.

Spot July hogs closed 1.075 cents per pound higher at 101.925 cents (all figures US$).

Most-actively traded August finished up 0.525 cent at 95.7 cents and October ended at 84.6 cents, or up 0.75 cent.

Slumping cash hog and wholesale pork values pulled futures from morning tops.

The U.S. Department of Agriculture’s Wednesday morning mandatory wholesale pork price, or cutout, was $103.18 per hundredweight (cwt), which was $2.36 lower than on Tuesday.

Wednesday morning’s average hog price in the most-watched Iowa/Minnesota market fell 90 cents/cwt from Tuesday to $99.05.

“People are getting the sense that cash and product have topped out for the near term,” a trader said.

Packers would resist raising bids for supplies if they are unable to sell the pork, the trader said. Hot, humid weather in sections of the country has curbed grilling demand, he said.

Spot July hogs closed 1.075 cents/lb. higher at 101.925 cents.

Most-actively traded August finished up 0.525 cent at 95.7 cents and October ended at 84.6 cents, or up 0.75 cent.

Beef pressures live cattle

Wholesale choice beef prices retreated for a fourth straight session, pressuring CME live cattle futures, traders and analysts said.

The government’s Wednesday morning data showed the wholesale price of choice beef at $193.70/cwt. The price was 62 cents lower than on Tuesday and down $4.38 from a week earlier.

Sultry weather typically tempers enthusiasm for cooking outdoors.

The shift by funds in accordance with the S+PGSCI exerted more pressure on CME August live cattle but limited October futures’ losses.

CME live cattle August closed 0.65 cent/lb. lower at 122.075 cents. October ended at 126.375 cents, or down 0.325 cent.

Investors await this week’s cash cattle sales. Cash cattle bids in Texas and Kansas stood at $115 to $116 against sellers asking $121 and higher for their animals, said feedlot sources.

Last week, cash-basis cattle in the U.S. Plains fetched $119 to $120.50/cwt. Fewer cattle for sale this week could lend cash support.

Sluggish beef demand might limit how much processors spend for supplies.

Feeder cattle futures followed the weaker CME live cattle market. August CME feeder cattle closed at 150.55 cents, or down 0.6 cent/lb. September finished 0.55 cent lower at 153.125 cents.

— Theopolis Waters reports for Reuters from Chicago.

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