U.S. livestock: CME hog futures close mixed after volatile session

Chicago | Reuters — Chicago Mercantile Exchange hog futures closed mixed on Wednesday, supported by higher cash hog prices while pressured by sporadic profit-taking, traders said.

The morning’s hog price in the closely watched Iowa/Minnesota market rose $2.41 per hundredweight (cwt) to $122.90, surpassing Tuesday’s $121.13 record, based on U.S. Department of Agriculture data.

Packers continued to hike bids for cash hogs that are in short supply as the deadly porcine epidemic diarrhea virus (PEDv) sweeps through U.S. hog farms.

Some hog farmers are likely not renewing pre-arranged contracts with packers, and instead are negotiating directly for supplies in the near term, a trader said.

From Monday to Wednesday packers processed an estimated 1.22 million hogs, down 17,000 from last week and 62,000 fewer than a year earlier, according to USDA.

April futures posted a new contract high after investors simultaneously bought that month and sold deferred contracts.

April closed 0.925 cents per pound higher at 124.15 cents, and peaked at a contract high of 124.55 cents in electronic trading. June finished 0.75 cent lower at 132.25 cents.

Cattle awaits cash, USDA report

CME live cattle finished mixed after choppy action as investors adjusted positions before this week’s cash sales and Friday’s USDA monthly Cattle on Feed report, traders said.

Analysts expect the data to show increased cattle placements in February as profitable feedlot margins allowed them to bring in more calves for fattening.

On Friday, USDA will simultaneously release the monthly cold storage report, which will include total beef and pork stocks in February.

Meanwhile, packers have not responded to feedlots in Kansas and Texas that priced cash cattle at $152/cwt. Last week, cash cattle in both states fetched $148/cwt, and upward of $152 in Nebraska, feedlot sources said.

April futures investors are looking for cash cattle to trade on par with last week given profitable packer margins and fewer animals for sale, traders and analysts said.

They said packers may resist bidding up for cattle, based on the mixed beef cutout and expectations of a seasonal bump in supplies in the weeks ahead.

The afternoon’s wholesale choice beef price, or cutout, slipped 18 cents/cwt from Tuesday’s record high to $243.90. Select cuts were up 72 cents to $237.94, eclipsing the $237.71 record on March 11, based on USDA data.

Beef packer margins for Wednesday were estimated at a positive $31.75 per head, compared with a positive $23.45 on Tuesday and a positive $22.55 a week ago, as calculated by HedgersEdge.com.

April live cattle closed up 0.425 cent/lb. at 146.125 cents, and June ended at 138.275 cents, down 0.075 cent.

CME feeder cattle mimicked live cattle mixed settlement.

March ended up 0.275 cent/lb. at 174.4 cents, and April closed down 0.25 cent at 176.65 cents.

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

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