Chicago | Reuters — Chicago Mercantile Exchange hog contracts closed higher on Thursday on short-covering and futures’ discount to CME’s hog index at US109.25 cents.
October and December ended 1.125 cents higher at 93.625 and 87.55 cents per pound, respectively (all figures US$).
CME hogs had a relative strength index (RSI) of 15. A RSI below 30 suggests the market is oversold and subject to an upward correction.
In recent weeks, hog futures felt pressure from downward trending prices for slaughter-ready, or cash, hogs pegged to ample numbers of heavyweight animals.
Thursday morning’s average price of hogs in the western Midwest dropped $1.33 per hundredweight (cwt) from Wednesday to $95.03, the U.S. Department of Agriculture said.
Plentiful heavy hogs increased the amount of pork available to retailers, which periodically weighed on pork values.
USDA data showed the morning wholesale pork price, or cutout, at $108.02/cwt, up 77 cents from Wednesday when it was $2.41 lower than on Tuesday.
“The cutout printed higher when everyone expected it to be lower, which caught some people off guard,” said AgFutures Managed Investments trader Tom Cawthorne.
Whether Thursday’s rally will carryover into Friday is unknown given current market volatility, said Cawthorne.
Live cattle up slightly
CME live cattle finished moderately higher after a choppy session, supported by short-covering and futures’ discounts to prices for slaughter-ready or cash cattle.
August live cattle ended 0.4 cent/lb. higher at 149.65 cents, and October at 145.55, up 0.15.
On Thursday morning, a small number of cash cattle moved in Kansas at $153/cwt, up $1 from Wednesday but down $2 from last week, according to feedlot sources.
Cash cattle bids elsewhere in the U.S. Plains were $152, with no word from processors, they said.
Investors see the slowdown in wholesale beef demand and outlook for an seasonal bump in supplies weighing on cash returns.
Thursday morning’s choice wholesale beef price fell $1.03/cwt from Wednesday at $250.52. Select dipped 56 cents to $242.51, the USDA said.
Traders adjusted position’s before Friday’s USDA monthly Cattle-On-Feed report.
Analysts expect the data to show less cattle placed in feedlots last month due to expensive calves that discouraged some feedyards from buying them.
On Friday, USDA will simultaneously issue the monthly cold storage data, including total July beef and pork inventories.
CME feeder cattle closed mostly lower, with back months down on fund buying and weaker deferred live cattle futures.
August feeder cattle drew support from its discount to the exchange’s feeder cattle index at 218.27 cents.
August closed up 0.25 cent/lb. at 215.2 cents. September ended 1.825 cents lower at 209.425, and October down 1.775 cents at 208.6.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.