U.S. livestock: CME hogs slump as Wall Street tumbles

(CMEGroup.com)

Chicago | Reuters –– Chicago Mercantile Exchange lean hogs closed lower on Thursday, pressured by active U.S. stock market selling as the dollar surged to a four-year high, traders and analysts said.

The strong dollar makes U.S. goods including pork less attractive to foreign buyers.

Hog futures’ losses mounted after nearby trading months drifted below moving-average support levels, which triggered fund selling.

Fundamentally, investors remain skittish about slaughter-ready hog prices and pork at wholesale as supplies, and animal weights, start to rise seasonally.

Thursday morning’s average hog price in Iowa/Minnesota gained 69 cents per hundredweight (cwt) from Wednesday to $108.26, but dipped 10 cents in the eastern Midwest to $101.10, the U.S. Department of Agriculture said.

USDA data showed the morning’s wholesale pork price declined 15 cents/cwt from Wednesday to $117.28.

Investors adjusted positions before the government’s quarterly hog report on Friday.

Analysts expect the report to show impact from porcine epidemic diarrhea (PED) and possible herd expansion caused by high hog prices and low-cost feed.

October hogs closed 1.125 cents per pound lower at 106.325 cents, after returning above the 100-day moving average of 106.13 cents.

December ended at 93.6 cents, down 1.6 cents, and clawed back above the 40-day moving average of 92.47 cents.

Live cattle end firm

CME live cattle gained modestly, supported by short covering after recent losses and October’s discount to last week’s cash prices, traders said.

October live cattle finished up 0.125 cent/lb. at 155.45 cents, and December was 0.325 cent higher at 159.1 cents.

Last week, market-ready, or cash, cattle in the U.S. Plains moved at mostly $159 to $160/cwt.

This week, investors look for packers to keep a lid on cash prices based on their unprofitable margins and lacklustre wholesale beef demand.

An isolated cash cattle bid developed in Kansas at $157/cwt against sellers asking $161 to $162, a feedlot source said.

Thursday’s beef packer margins were a negative $85.95 per head, compared with a negative $88.50 on Wednesday and a negative $66.70 a week ago, according to Colorado-based analytics firm HedgersEdge.com.

The morning’s choice wholesale beef price was up 22 cents/cwt from Wednesday to $239.35. Select dropped 52 cents to $225.79, USDA said.

Some traders bought deferred live cattle months in anticipation of tight numbers, said K+S Financials analyst Jack Salzsieder.

CME feeder cattle finished weak on profit-taking after some trading months spiked to new contract highs.

September, which expired at noon CT, settled at 230.875 cents, down 0.2 cent.

October closed 0.3 cent lower at 230.1 cents. It posted a fresh contract high of 231.325 cents in electronic trading.

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

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