U.S. livestock: CME hogs break five-day stretch of two-year lows

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters –– Chicago Mercantile Exchange lean hogs ended higher on Monday on short-covering, and the wholesale pork price bounce that helped snap futures’ five-day streak of two-year lows, traders said.

February closed 1.525 cents per pound higher at 70.825 cents, and April up two cents, to 72.65 cents (all figures US$).

CME lean hogs’ Relative Strength Index (RSI) of 20 attracted bargain hunters. An RSI below 30 suggests the market is oversold and subject to an upward adjustment.

CME February hogs were under priced compared with the exchange’s hog index for Jan. 22 at 73.57 cents, which generated more buying

Bullish market players cling to the prospect of a seasonal turnaround in cash prices after packers exhaust sufficient near-term supplies.

Cash prices in the Midwest on Monday morning sold steady to down as much as $2 per hundredweight (cwt) from Friday, regional hog dealers said.

Wintry weather in parts of the U.S. Midwest this week might lend support to cash prices, but a Nor’Easter in the North Atlantic could dent meat demand in that region.

Live cattle futures sag

CME live cattle posted losses for a third consecutive session, pressured by persistent fund selling and sluggish wholesale beef demand, traders said.

February ended 0.525 cent/lb. weaker at 149.825 cents, and April 0.8 cent/lb. lower at 148 cents.

Monday morning’s choice wholesale beef price slumped $1.65/cwt from Friday, to $252.09. Select fell $1.20, to $246.03, the USDA said.

Near-record high wholesale beef costs deterred grocers who are eying competitively priced pork and poultry, a trader said.

The East Coast storm could further hurt wholesale beef values if residents are unable to go to restaurants and treacherous travel conditions delay meat from being trucked from packing plants to buyers.

Futures’ discount to last week’s cash prices stirred short-covering and speculative buying that freed contracts from morning lows.

Last week, cash cattle in the U.S. Plains sold at $158-$160/cwt, down from mostly $162-$164.50 the week before, feedlot sources said.

Cash prices may again come under pressure based on current futures prices and more cattle for sale this week, traders said.

Sagging live cattle contracts and sharply lower cash feeder cattle prices dropped CME feeder cattle futures.

January closed 2.05 cents/lb. lower at 211.65 cents, and March down 1.85 cents to 199.975 cents.

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

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