Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures gained for a third straight session on Wednesday, backed by rising cash and wholesale pork prices, traders said.
May hogs closed 1.35 cents higher at 80.35 cents per pound, and June was up 1.3 cents to 84.05 cents/lb. (all figures US$).
Wednesday morning’s average market-ready (cash) hog price in Iowa/Minnesota rose 41 cents/cwt to $77.02 from Tuesday, according to the U.S. Department of Agriculture (USDA).
Separate USDA data showed the morning’s wholesale pork price at $77.19/cwt, $1.17 higher than on Tuesday.
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“People are more inclined to expect sustained strength in the hogs going forward given improving pork demand and seasonally declining slaughter rates,” said Doane Advisory Services economist Dan Vaught.
CME live cattle retreat
Traders said profit-taking amid this week’s cash price uncertainty pressured CME live cattle futures.
June ended 1.225 cents lower at 150.225 cents/lb., and August was down 0.975 cent, to 148.925 cents/lb.
Cash bids surfaced on Wednesday in Kansas at $157/cwt against $163 asking prices there and in Texas, industry sources said. Last week, cash cattle in the U.S. Plains sold at $160 to $163.
Processors who need inventory may pay the same as last week for cattle, traders said.
Other packers may cut kills to coincide with supplies bought last month for early May delivery and cattle contracted against the futures market, they said.
USDA on Wednesday estimated packers processed 106,000 head of cattle, 9,000 less than a week ago.
Despite the morning’s wholesale beef price uptick, Tuesday afternoon’s beef cutout setback may have set Wednesday’s bearish futures’ tone.
Wednesday morning’s choice wholesale beef price, or cutout, was up $1.07/cwt from Tuesday to $256.63/cwt. Select cuts gained 64 cents, to $244.24, USDA said.
Tuesday’s weaker cutout dispelled initial bullish sentiment that grocers are aggressively buying beef for U.S. Memorial Day features, said Vaught.
Funds sold, or rolled, their June long positions while at the same time they bought the August contract ahead of similar moves on the eve of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI) roll. The roll strategy will officially begin Thursday and conclude May 13.
CME feeder cattle felt pressure from the corn price rebound and live cattle market selling.
April closed down 0.875 cent/lb., to 214.5 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
