U.S. livestock: CME hogs up on short-covering before USDA report

(CMEGroup.com)

Chicago | Reuters –– Chicago Mercantile Exchange hog futures closed higher on Friday, supported by short-covering and positioning before the U.S. Department of Agriculture’s quarterly hog report at 2 p.m. CT, traders said.

Analysts expect Friday’s data to show the porcine epidemic diarrhea virus hurt U.S. hog supplies while high hog prices fueled herd expansion.

Market bulls recently liquidated long positions in anticipation of a potentially bearish USDA hog report.

“With the beating those months have taken this week, the hog report is already being baked into the cake,” independent livestock futures trader Dan Norcini said.

Expectations packers will need fewer hogs, due to plant closures for the July 4 holiday, discouraged futures buyers.

Friday morning’s average price for cash hogs in the Iowa/Minnesota region dropped 68 cents per hundredweight (cwt) from Thursday to $125.28 (all figures US$).

Wholesale pork demand could wane after supermarkets buy all they need to feature for barbecues over the three-day holiday weekend.

The morning’s wholesale pork price was up eight cents/cwt from Thursday to $131.89, according to USDA data.

July hogs closed up 1.05 cents per pound to 130.9, and August 1.025 cents higher at 129.825 cents.

Profit-taking trumps record cattle prices

CME live cattle ended lower on profit-taking that overshadowed record-high prices for slaughter-ready, or cash, cattle, traders said.

Cash cattle in Texas and Kansas moved at an all-time high of $154/cwt, up $4 from a week ago. Cash cattle in Nebraska sold at a record $155 versus $148 to $150 last week.

Investors had already anticipated a higher cash cattle market and took profits before Monday, the last trading day of the quarter, a trader said.

“Packers paid up for cattle because of tight supplies and so far, the high price of beef has not stopped demand,” said Oak Investment Group president Joe Ocrant.

USDA’s morning data showed wholesale price for choice beef rose $1.06/cwt to $246.07, surpassing Thursday’s record. Select beef was at $237.51, down five cents.

Beef prices surged this week, fueled by strong retail demand for grilling, robust U.S. beef exports and scarce cattle numbers after several years of drought hurt crops.

With this week’s cash cattle trade completed, Monday’s session could prove volatile as investors even up positions on the final trading session for the quarter.

June live cattle, which will expire on Monday, finished 1.5 cents/lb. lower at 152.25 cents, and August down 1.625 cents to 151.125 cents.

CME feeder cattle ended lower, pressured by profit-taking and live cattle market losses.

August closed down 0.8 cent/lb. to 214.325 cents, and September at 215.9 cents, one cent lower.

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

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