Chicago | Reuters — Chicago Mercantile Exchange lean hog futures on Tuesday fell for a third consecutive session, dragged down by weaker cash and wholesale pork prices amid abundant seasonal supplies, said traders.
December closed down 0.775 cent/lb. to 46.125 cents, and February ended 0.7 cent/lb. lower at 52.9 cents (all figures US$).
“There are plenty of hogs around and too much product to move right now,” said AgFutures Managed Investment hog futures trader Tom Cawthorne.
The morning’s wholesale pork price on Tuesday slipped 28 cents/cwt from Monday to $74.38, the U.S. Department of Agriculture said.
Separate USDA data showed Tuesday morning’s average cash hog price in Iowa/Minnesota at $41.36/cwt, down 37 cents from Monday.
Monday and Tuesday’s combined hog slaughter totaled 879,000 head, 5,000 more than a year earlier, according to U.S. government estimates.
Low-cost hogs have enhanced profits for packers, offering them an incentive to maintain brisk slaughter rates, said traders and analysts.
Tuesday’s average pork packer margins were estimated at $63.55 per head, up from a positive $61.60 on Monday, according to consultancy HedgersEdge.com.
Uneven cattle settlement
CME live cattle futures closed mixed as investors adjusted positions ahead of cash prices by week’s end, said traders.
December live cattle closed down 0.1 cent/lb. to 105.475 cents. February ended unchanged at 106.525 cents. April finished 0.725 cent higher at 106.95 cents.
Last week, slaughter-ready, or cash, cattle in the U.S. Plains traded at mostly $105/cwt, compared to $102 to $105 the week before.
Market bulls expect packers to pay more than last week for cattle based on fewer of them for sale and the potential increase in beef demand heading into the winter holidays.
Bearish traders cited the upcoming Thanksgiving holiday-shorted workweek, which could reduce the number of animals packers need for processing.
Market participants await the sale of nearly 13,500 cattle on Wednesday morning’s Fed Cattle Exchange. Animals there last week brought $103-$104.25/cwt.
Steady-to-stronger cash feeder cattle prices and firmer back-month live cattle futures sent CME feeder cattle contracts higher.
November feeders, which will expire on Thursday, finished up 0.575 cent/lb. to 126.6 cents. Most actively traded January ended 0.7 cent higher at 123.025 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.