U.S. livestock: CME hogs extend gains on short-covering

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters –– Chicago Mercantile Exchange hog futures on Wednesday gained for a third day in a row, supported by short-covering ahead of the U.S. Labour Day holiday, traders said.

Fund buying developed after some CME hog contracts broke through moving average resistance levels.

October closed 0.825 cent per pound higher at 95.925 cents (all figures US$). December ended at 90.5 cents, up 0.8 cent and above the 20-day moving average of 90.12 cents.

The prospect that some packers may need hogs for the first full week of production after Labour Day motivated speculative buyers.

Currently, most processors are snug on inventories with plants scheduled to be closed for Monday’s holiday.

Wednesday afternoon’s average price of hogs in the Iowa/Minnesota region fell $1.26 per hundredweight (cwt) from Tuesday to $92.31, the U.S. Department of Agriculture said.

Wholesale pork demand could struggle until supermarkets determine how much product cleared meat cases over the holiday weekend.

The afternoon’s wholesale pork price slumped $2.98/cwt from Tuesday to $100.18, primarily pulled down by the $13.94 plunge in pork belly costs.

Investors settling their accounts in perpetration for the upcoming holiday could result in choppy market activity on Thursday, traders and analysts said.

Live cattle turn weak

CME live cattle finished weak for the first time in five days, weighed by profit-taking and anticipation of steady to lower prices for market-ready or cash cattle this week, traders said.

August live cattle, which will expire on Friday, ended down 0.35 cent/lb. at 153.2, and October at 147.825, 0.425 cent lower.

Last week, cash cattle in Kansas and Nebraska moved at mostly $153-$155/cwt.

Soft live cattle futures and packers buying for the holiday-shortened workweek might pressure cash prices, said Oak Investment Group president Joe Ocrant.

More cattle are available after packers bought fewer of them last week. And, processors lowered wholesale beef prices to attract last-minute Labour Day retail business.

On Wednesday afternoon, the government showed the choice wholesale beef price down $1.07/cwt from Tuesday at $247.41. Select dropped 88 cents to $237.60.

Futures’ price discounts to last week’s cash cattle prices mitigated Wednesday’s market losses.

CME feeder cattle finished mixed with August futures guided by ideas about where it will settle after expiration on Thursday.

The September feeder cattle contract drew support from its discount to CME’s feeder cattle index at 217.68 cents.

Profit-taking undercut remaining feeder cattle trading months.

August closed 0.625 cent/lb. higher at 218.15 cents, and September up 0.275 at 214.475 cents. October ended down 0.325 cent to 212.15 cents, and November 0.6 cent lower at 210.225 cents.

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

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