U.S. livestock: CME hogs drop with cash, wholesale pork prices

(CMEGroup.com)

Chicago | Reuters –– Chicago Mercantile Exchange lean hogs turned lower on Thursday, pressured by weaker cash and wholesale pork prices, traders said.

April and June closed 1.175 cents per pound lower at 66.825 cents and 77.45 cents, respectively (all figures US$).

Wholesale pork prices slumped $1.49 to $68.49 per hundredweight (cwt) on Thursday morning from Wednesday, led mostly by a $5.77 plunge for pork bellies, the U.S. Department of Agriculture said.

Separate USDA data showed the average market-ready or cash hog price in Iowa/Minnesota Thursday morning had slipped 41 cents/cwt from Wednesday, to $64.48.

Sluggish pork sales forced packers to bridle cash spending to preserve their thin margins.

But pork demand is expected to pick up as spring grilling approaches and shoppers eye less-costly pork versus near-record-high beef prices.

“There is a tremendous economic incentive for consumers to switch out of beef into pork. I’d be interested to see how they do that once the weather improves,” said David Maloni, chief analyst with the American Restaurant Association.

April future’s losses mounted after they drifted below the 10-day moving average of 67.65 cents.

Live cattle grind lower

CME live cattle futures settled moderately lower on profit-taking guided by sentiments that Wednesday’s market rally was overdone, traders said.

April closed 0.775 cent/lb. lower at 153.275 cents, and June down 0.3 cent, to 146.025 cents.

Worries that the surging dollar could hurt exports of U.S. goods weighed on CME live cattle contracts throughout the session.

Anticipation of steady or better cash prices this week, based on firm wholesale beef values and positive packer margins, limited futures’ losses.

So far, bids for cash cattle in the U.S. Plains stand at $157-$159/cwt against $162 asking prices, feedlot sources said. Cash cattle last week moved at mostly $158 to $160.

Thursday morning’s choice wholesale beef price gained 33 cents/cwt from Wednesday, to $248.91. Select cuts were up 23 cents, to $247.46, according to USDA.

CME feeder cattle March’s close proximity to the exchange’s feeder cattle index for March 4 at 206.66 cents deterred buyers.

Remaining feeder cattle months benefited from their discounts to the exchange’s index.

March closed 0.650 cent/lb. lower at 206.575 cents, while April ended up one cent, to 205.375 cents, and May 1.9 cents higher at 204.675 cents.

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

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