U.S. livestock: CME hogs rally with biggest daily gain in four months

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange lean hogs closed sharply higher Wednesday on short-covering that earlier drove futures to their biggest one-day gain in four months at over two per cent. The electronic is currently trading and is up 1.8 per cent.

February closed 2.1 cents per pound higher at 71.525 cents, and April up 2.9 cents, to 74.95 cents (all figures US$). May and June settled up the three-cent/lb. price limit at 80.925 cents and 84.575 cents, respectively.

Bullish investors look for cash and wholesale pork prices to improve after meat demand resumes in the U.S. Northeast as the region recovers from a blizzard.

Wednesday morning’s average market-ready or cash hog price in Iowa/Minnesota dipped nine cents per hundredweight (cwt) from Tuesday to $67.67, the U.S. Department of Agriculture said.

Separate USDA data showed the morning’s wholesale pork price had slipped 31 cents/cwt from Tuesday to $81.30.

Progress in labour talks involving U.S. West Coast port workers encouraged futures traders. The prolonged work slowdown significantly delayed shipments of U.S. goods, including meat.

“There was finally some good news out there and people ran with it,” a trader said.

April and June futures broke through the 10-day moving average of 74.6 cents and 84.23 cents, which triggered fund buying.

Live cattle gain

CME live cattle closed higher, helped by short-covering that was partly due to the modest turnaround in wholesale beef prices, traders said.

February closed 1.125 cents/lb. higher at 153.95 cents, and April up 0.5 cent to 151.5 cents.

Wednesday morning’s choice wholesale beef price rose 33 cents/cwt from Tuesday to $248.03. Select gained 46 cents to $240.72, the USDA said.

Packers recently cut beef prices enough to attract retail buyers, traders and analysts said.

Fund buying developed after February and April punched through their respective 10-day moving averages of 153.15 cents and 151.42 cents.

Futures’ discounts to last week’s prices for cash cattle encouraged buyers.

This week, packers are expected to spend steady or less money for supplies based on their negative margins and current futures prices.

Cash bids surfaced in parts of the U.S. Plains at $156/cwt with no response from packers, who last week spent $158-$160 for cattle, feedlot sources said.

CME feeder cattle drew support from lower corn prices, technical buying and live cattle market advances.

January closed 1.675 cent higher at 212.450 cents/lb., and March ended up 0.525 cent, to 204.35 cents.

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

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