Chicago | Reuters –– Chicago Mercantile Exchange hog futures closed mixed on Monday after market-ready or cash hog prices pressured nearby contracts, but the “roll” by funds supported back months, traders said.
Monday afternoon’s hog price in the Iowa/Minnesota market dropped $2.42 per hundredweight (cwt) from Friday to $108.35, the U.S. Department of Agriculture said (all figures US$).
Packers resisted hiking cash hog bids given their unprofitable margins and inconsistent wholesale pork demand, said AgriVisor Services analyst Dale Durchholz.
Separate USDA data showed the morning’s wholesale pork price jumped $2.09/cwt from Friday to $113.82.
Funds trading in CME’s hogs and live cattle markets shifted June long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).
Monday was the fourth of five days for the index roll process.
Speculators bought deep-deferred months in anticipation of fewer hogs pegged to the porcine epidemic diarrhea virus (PEDv) spread.
“I look for a another choppy session on Tuesday as traders wrestle with futures’ premium to cash prices and a tight supply scenario,” a trader said.
May hogs closed down 1.25 cents/lb. at 113.425 and June ended 1.175 cents lower at 119.
July ended 0.6 cent higher at 125.15, and August up 0.85 cent at 123.35.
Cattle slip on profit-taking
CME live cattle ended weak on profit-taking and the “roll” by funds into deferred contracts, traders said.
They said tepid wholesale beef demand and fading packer margins kept investors on the defensive.
Cattle slaughters should ramp up heading into summer, which could pressure cash prices, Durchholz said.
Last Friday, cattle in Texas and Kansas moved at $146 per cwt, and up to $150 in Nebraska.
The Monday afternoon wholesale choice beef price gained 56 cents/cwt from Friday to $223.82. Select cuts rose 43 cents to $212.64, based on USDA.
Beef packer margins for Monday were at a negative $33.85 per head, compared with a negative $13.90 on Friday and a positive $1.95 a week ago, as calculated by HedgersEdge.com.
Investors await the government’s monthly cattle-on-feed report on Friday.
Initial analysts’ estimates suggest cattle placements last month declined from April 2013 after several years of drought in parts of the United States shrunk the herd to a 63-year low.
June ended at 137.65 cents, 0.4 cent lower and August down 0.125 cent at 138.075 cents.
Lower corn prices and steady-to-higher cash feeder cattle returns spiked CME feeder cattle to an all-time high.
May closed up 0.025 cent/lb. at 184.6 cents, and hit a contract high of 185.425 cents. August up 0.5 cent at 191.875 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.