U.S. livestock: CME hogs climb despite Smithfield plant closure

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures pared the prior day’s losses on Thursday, led by technical buying in the face of ample packer inventories and a temporary shutdown at an East Coast packing plant, traders said.

December lean hogs finished 1.175 cent/lb. higher at 45.375 cents (all figures US$). February ended 1.2 cents higher at 52.325 cents, and earlier spiked above the 40-day moving average of 52.54 cents.

Smithfield Foods closed its Tar Heel, N.C. hog processing plant on Thursday and Friday due to “operational issues” resulting from Hurricane Matthew, a company spokeswoman said.

The plant had resumed full operations last week after being idled earlier this month by the storm.

Typically, production disruptions at major meat packing plants delay delivery of animals to the affected facility, resulting in a surplus of livestock on farms.

“This makes this rally in the hogs even more suspect … we are going to be backing hogs up again,” said independent CME livestock futures trader Dan Norcini.

The seasonal bump in overall hog numbers, which pressured prices for slaughter-ready, or, cash hogs, afforded most processors the luxury of effortlessly filling inventories in advance of Saturday’s slaughter.

Midwest hog merchants expect packers to process roughly 290,000 head on Saturday. Last Saturday’s hog slaughter totaled 317,000 head, according to U.S. Department of Agriculture estimates.

Higher cattle market close

CME live cattle gained for a second straight day, mostly driven by anticipation of higher cash prices by Friday, said traders.

October live cattle, which will expire on Monday, closed 1.075 cents/lb. higher at 104.125 cents. Most actively traded December ended 0.75 cent higher at 105.15.

Cash cattle bids in Texas and Kansas were $102-$103/cwt versus up to $106 asking prices, said analysts and feedlot sources. Last week, cash cattle in the U.S. Plains fetched $99-$100.

Current futures prices, extremely profitable packer margins and Wednesday’s strong cash returns at the Fed Cattle Exchange are supportive cash price influences, a trader said.

CME feeder cattle closed mixed, pressured by profit-taking but supported by firmer live cattle futures.

October feeders, which expired at noon CT, settled at 121.925 cents, down 0.05 cent per pound.

Most actively traded November finished down 0.05 cent to 123.875 cents, and January up 0.175 cent to 118.525 cents.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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