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U.S. livestock: Bargain-buying lifts CME lean hogs

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange lean hogs on Thursday settled moderately higher on bargain buying after supply worries sank futures to a 10-month low for a second day in a row, traders said.

October closed up 0.225 cent/lb. to 55.15 cents, and December ended 0.35 cent higher at 49.45 cents (all figures US$).

Monday through Thursday’s hog slaughter totaled 1.744 million head, 23,000 more than the same period last year, according to U.S. Department of Agriculture estimates.

USDA reported record hog supplies last year, and projected the same for 2016, as the industry recovers from the porcine epidemic diarrhea virus that killed an estimated eight million pigs since May 2013.

And processors paid less for hogs that are readily available as moderating temperatures in the Midwest causes them to grow faster.

“When a big bolder is running downhill it’s hard to stop it. Until we see these bigger hog numbers start to flatten out, the cash market will continue to lose ground,” an Iowa hog merchant said.

Thursday morning’s average cash hog price in Iowa/Minnesota dropped 69 cents/cwt from Wednesday to $57.208, USDA said.

There may be signs that some supermarkets are wrapping up pork purchases for National Pork Month advertisements in October.

USDA’s data showed Thursday morning’s wholesale pork price slumped $2.02/cwt from Wednesday to $79.99.

Live cattle up again

CME live cattle gained for a second consecutive session on buy stops and technical buying, said traders.

October live cattle ended 1.150 cents/lb. higher at 106.95 cents, and settled above the 20-day moving average of 106.01 cents. December closed up 0.6 cent to 106.975 cents after earlier spiking above the 20-day moving average of 107.41 cents.

Some investors bought futures in anticipation of steady-to-better cash prices by week’s end based on highly profitable packer margins and potential seasonal turnaround in beef demand soon.

However, recent market volatility sidelined other market participants.

“I’m playing it close to vest right now because there have been big moves in the market both ways,” said Oak Investment Group president Joe Ocrant.

Packer bids for slaughter-ready, or cash, cattle in the U.S. Plains were at $104/cwt versus $110 asking prices for animals that last fetched mostly $105, said feedlot sources.

Technical buying and higher CME live cattle futures boosted CME feeder cattle. September ended 1.3 cents/lb. higher at 133.975 cents.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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