Chicago | Reuters — Chicago Mercantile Exchange lean hog futures bounced from a three-month low on Monday and settled higher for the first time in eight sessions in a technical and bargain-buying rally to start the first full trading week of the year.
Cattle futures also gained on improved packer demand following recent weeks of holiday-curtailed slaughter shifts.
Livestock futures were underpinned by a more optimistic investor view of the economy as recent government reports on jobs and wage growth tempered expectations about further rate hikes by the U.S. Federal Reserve. A rosier outlook on the economy would serve to boost restaurant traffic and demand for higher-end cuts of meat.
Read Also
U.S. livestock: Cattle futures come down from highs
Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
“There’s a general perception suddenly now that the Fed interest rate hikes might slow down … It seemed like the demand worries slowed down a little bit,” said Doug Houghton, analyst with Brock Capital Management.
“The hogs were hit so hard last week, there’s probably some bargain hunting going on,” he said.
CME February lean hogs touched a low of 79.7 cents/lb. on Monday, the lowest since Oct. 7, but ended 0.525 cent higher at 80.8 cents/lb. (all figures US$). Deferred contracts were up as much as 2.025 cents.
Benchmark February live cattle futures rose 0.975 cent, to 157.75 cents/lb. March feeder cattle futures gained 0.65 cent, to 186.3 cents/lb.
Cash cattle, which sold at steady to lower prices last week, are expected to trade steady to possibly higher this week. Packer margins have improved and packing plants are ramping up operations following slowed slaughter rates around the year-end holidays.
The average beef packer margin stood at an estimated $158.10 per head on Monday, up from a negative $115.05 a month ago, according to marketing advisory service HedgersEdge.com LLC.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.
