Chicago | Reuters — Chicago Mercantile Exchange lean hog futures fell three per cent Wednesday, with deferred contracts making new lows, on the strong dollar and bird flu in Arkansas, traders said.
The U.S. Department of Agriculture on Wednesday confirmed the case of highly pathogenic avian influenza in a commercial turkey flock in Arkansas.
Investors worried that the Arkansas bird flu outbreak could hurt U.S. poultry exports, causing product to back up and compete with already low-cost pork.
“The last thing that the hog market needs right now is something along this line,” said independent livestock futures trader Dan Norcini, referring to the outbreak.
Packers are spending less for market-ready (cash) hogs while struggling to sell pork, some of which still stacked up at U.S. West Coast ports, he said.
The strong dollar makes U.S. goods less attractive to foreign buyers.
USDA data showed the afternoon wholesale pork price was down 42 cents per hundredweight (cwt) to $68.21 from Tuesday (all figures US$).
Wednesday afternoon’s average cash hog price in Iowa/Minnesota fell $1.39/cwt from Tuesday to $62.12, USDA said.
Funds involved in CME’s livestock markets sold or “rolled” some of their April positions and simultaneously bought deferred contracts. The trading strategy known as the “roll” is tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).
Wednesday was the fourth of five days for the S+P GSCI roll procedure.
April closed 1.85 cents/lb. lower at 64.125 cents. May ended 2.475 cent lower at 73.325 cents, and posted a fresh contract low of 72.8 cents in after-hours electronic trading.
Cattle move up
CME live cattle futures climbed in anticipation of steady or higher cash prices this week, traders said.
April closed 0.85 cent/lb. higher at 155.6 cents, and June up 0.675 cent to 146.925 cents.
Packers may compete for fewer cattle for sale, despite their slipping margins and lacklustre wholesale beef demand.
Cash cattle bids in Kansas and Texas were at $161/cwt against up to $164 asking prices, said industry sources. Last week, cash cattle moved at mostly $161-$162.
The afternoon’s choice wholesale beef price dipped 32 cents/cwt from Tuesday, to $247.47. Select cuts slipped 24 cents, to $244.88, the USDA said.
CME feeder cattle followed live cattle futures higher.
March closed 2.375 cents/lb. higher at 214.6 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.