Chicago | Reuters — Chicago Mercantile Exchange hog futures marked a new high for a third straight session as tight supplies continued to drive up prices for market-ready hogs, traders said on Monday.
Packers are finding it hard to buy hogs as the deadly porcine epidemic diarrhea virus (PEDv) reduces the number of available animals on U.S. hog farms.
Some of the country’s biggest processors curtailed production to offset scarce supplies, traders and industry sources said.
On Monday, packers processed an estimated 389,000 hogs, down 19,000 from last week and 39,000 fewer than a year earlier, according to the U.S. Department of Agriculture.
USDA’s morning direct hog price data was not available. Hogs in the Midwest early on Monday traded steady to up $2 per hundredweight (cwt), hog dealers said (all figures US$).
Upward trending slaughter-ready hog prices pushed CME’s lean hog index to all-time high of 110.78 cents, surpassing the March 12 index of 109.16 cents.
June futures peaked at their three-cents daily price limit after funds bought that contract and sold April futures in accordance with the “roll” procedure that officially ended last Thursday.
The “roll” refers to funds in CME’s livestock markets that sold or “rolled” their April long positions and bought deferred months as followers of the Goldman Sachs Commodity Index (S+PGSCI).
April futures recently traded up their three-cents daily price limit which temporarily delayed the “roll” by funds, a trader said.
April closed 2.4 cents per pound higher at 121.7 cents, and peaked at a contract high of 122.15 cents in electronic trading. June finished up 2.925 cents to 130.85 cents.
Cattle mixed, await cash sales
CME live cattle finished mixed as investors await direction from this week’s sale of slaughter-ready or cash cattle, traders said.
Last week, cash cattle in Texas and Kansas fetched $148/cwt, and upwards of $152 in Nebraska, feedlot sources said.
“Packers and traders may take their cue from the cutout that has been mixed at best lately, suggesting it may have topped out,” a trader said.
The morning’s wholesale choice beef price, or cutout, jumped $2.20/cwt from Friday to a record-high $242.64 in light sales volume. But, select cuts dropped 93 cents to $235.57, based on USDA data.
Beef packer margins for Monday were estimated at a positive $18.15 per head, compared with a positive $34.55 on Friday and a negative $18.15 a week ago, as calculated by HedgersEdge.com.
April live cattle closed down 0.225 cent/lb. at 145.025 cents. June ended at 137.975 cents, up 0.125 cent, after hitting a fresh contract high of 138.45 cents.
CME live cattle market gained, with some contracts posting new highs, as corn prices moved lower.
March ended up 0.15 cent/lb. at 174.75 cents.
April closed 0.75 cent higher at 177.975 cents after setting a fresh contract high of 178.1 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.