Chicago | Reuters — Chicago Mercantile Exchange hog futures settled firmer on Friday after a volatile day of trading before the highly anticipated U.S. Department of Agriculture quarterly hog report at 2 p.m. CT.
Analysts’ estimates for USDA’s Friday report varied widely, reflecting uncertainty about how much the data will account for the impact of porcine epidemic diarrhea virus (PEDv) on U.S. farms in recent months.
“I don’t think anyone has a clear advantage over anyone else knowing what this report is going to say,” Sterling Marketing Inc. president John Nalivka said.
Steady to firm cash hog and wholesale pork prices underpinned the April contract. Investors also simultaneously sold April and bought June futures in a trading strategy known as spreads.
The Friday morning average hog price in the eastern Midwest region was up 90 cents per hundredweight (cwt) from Thursday at $124.64, according to USDA data (all figures US$). Prices elsewhere in the Midwest were unavailable.
The morning’s wholesale pork price rose 18 cents/cwt from Thursday to $130.93, USDA said.
April hogs closed up 0.1 cents/lb. at 125.575, after spiking to a new contract high of 127.3 cents. June hogs finished up 0.275 cent, at 129.575 cents.
Mostly weak live cattle
CME live cattle closed mostly weak after investors bought the April contract and at the same time sold deferred months in spread trading, traders said.
April futures drew support from its discount to this week’s record high prices for slaughter-ready cash cattle, a trader said. Lower wholesale beef values and profit-taking limited futures’ advances, he said.
The early wholesale choice beef price tumbled $2.82/cwt from Thursday to $236.43. Select cuts dropped 73 cents to $230.48, based on USDA data.
This week, cash cattle in Texas and Kansas traded at a record high of $152/cwt, and Nebraska cash cattle hit a $154 record, feedlot sources said.
Lower wholesale beef prices and record-high cattle prices trimmed packer margins.
HedgersEdge.com calculated the beef packer margins for Friday at an estimated negative $28.05 per head, compared with a negative $4.85 on Thursday and a positive $10.30 a week ago.
April live cattle closed up 0.025 cent/lb. at 146.5 cents. June ended down 0.175 cent at 138.35 cents, and August finished 0.35 cent lower at 135.075 cents.
Profit-taking and back-month CME live cattle losses undercut feeder cattle futures.
April closed 1.15 cents/lb. lower at 178.35 cents, and May ended down 0.375 cent at 179.5 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.