Chicago | Reuters –– Chicago Mercantile Exchange lean hogs closed lower on Monday on sell stops and fund liquidation after nearby contracts drifted beneath technical support levels, traders said.
February closed 1.375 cent per pound lower at 79.925 cents, below the 10-day moving average of 81.2 cents (all figures US$). April finished down 0.7 cents at 82.8 cents, beneath the 10-day moving average of 83.5 cents.
February suffered the session’s worst losses as some funds sold, or rolled, that contract and simultaneously bought deferred months ahead of similar moves on Thursday.
Funds that follow the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI) will conduct the first of five days of the procedure known as the “roll” on Jan. 8.
Bullish investors await a seasonal turnaround in slaughter-ready, or cash, hog prices as producers keep swine buildings closed to ward off bone-chilling temperatures, a trader said.
On Monday morning, slaughter hogs in the Midwest sold steady to down 50 cents per hundredweight (cwt), according to regional dealers.
Packers have lowered the price of some wholesale pork cuts to clear inventory while working through hogs that became backed up on farms during plant shutdowns over the New Year’s holiday.
Cattle up on discounts
CME live cattle finished higher, helped by futures’ discounts to last week’s prices for cash cattle, traders said.
February live cattle closed up 0.55 cent/lb. at 166.225 cents, and April was 0.875 cents higher at 165.45 cents.
Last week, cash cattle in the northern U.S. Plains fetched $166 to $169/cwt, up as much as $7 from the previous week, feedlot sources said.
Packers competed for cattle after not buying enough for the first week of production after the Christmas and New Year’s holidays.
Investors expect steady or better cash prices, given plummeting temperatures in parts of the U.S. Plains that could slowdown animal weight gains.
Grocers preparing to advertise beef in January are balking at the recent surge in prices prior to Monday.
The morning’s choice wholesale beef price dipped 16 cents/cwt from Friday to $248.87. Select cuts slipped 30 cents to $240.10, the U.S. Department of Agriculture said.
CME feeder cattle drew support from buy stops, live cattle market gains and technical buying.
January closed up 1.725 cents/lb. at 225.675 cents, and March ended 1.925 cents higher at 223.375 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.