Chicago | Reuters — Chicago Mercantile Exchange lean hogs closed higher on Thursday, fueled by bargain hunting in the technically oversold market, traders said.
February, which will expire on Friday, closed 0.725 cent per pound higher at 61.95 cents, and April up 0.675 cent, to 64.5 cents (all figures US$).
Before Thursday’s session, hog futures had a relative strength index (RSI) of 23. An RSI below 30 suggests the market is oversold and subject to an upward correction.
“Other than technical factors, I don’t see a lot of positive fundamental news in the market,” said Brock Associates analyst Doug Houghton. He cited soft cash and wholesale pork prices, partly due to port disruptions on the U.S. West Coast.
Thursday morning’s average market-ready or cash hog price in Iowa/Minnesota dropped $1.35 per hundredweight (cwt) from Wednesday, to $57.06, the U.S. Department of Agriculture said.
Separate USDA data showed the morning’s wholesale pork price at $72.30/cwt, 51 cents lower than on Wednesday.
West Coast shipment delays crimped U.S. meat exports, which has resulted in a buildup of product for domestic consumption, analysts said.
They said packers are hesitant to pay more for hogs unless they can consistently sell the meat they produce.
Live cattle firm in volatile trade
CME live cattle contracts settled moderately higher on cash price optimism, but futures periodically encountered profit-taking led by lethargic beef sales, traders said.
February closed 0.5 cent/lb. higher at 159.1 cents, and April up 0.025 cent, to 151.125 cents.
Cash cattle bids in Kansas stood at $161/cwt versus up-to-$164 asking prices, feedlot sources said. Last week, cash cattle in the U.S. Plains sold at $160-$162.50.
Bullish investors believe the seasonal dip in cattle numbers may force processors to pay up for supplies, despite their poor margins and competitively-priced pork.
The morning’s choice wholesale beef price slipped 13 cents/cwt from Wednesday to $239.61. Select cuts dropped 61 cents, to $235.75, USDA said.
Thursday’s beef packer margins were a negative $63.15 per head, compared with a negative $82.45 on Wednesday and a negative $65.05 per head a week ago, according to HedgersEdge.com.
Short-covering and fund buying furthered late-day CME live cattle futures gains.
CME feeder cattle rose on short-covering, technical buying and periodic live cattle market gains.
March and April closed at 200.3 cents/lb, up 1.55 cents and 1.6 cents respectively.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.