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U.S. livestock: CME lean hogs end down, live cattle up

Feeder cattle down as feed grains rally

Chicago | Reuters –– Chicago Mercantile Exchange (CME) lean hog futures closed lower on Wednesday on technical selling including profit-taking and long liquidation ahead of the U.S. Independence Day holiday, along with bearish supply fundamentals, traders said.

CME’s benchmark August lean hogs contract ended down 0.6 cent at 78.375 cents/lb., turning lower after rising to 80.85 cents, its highest since June 20 (all figures US$). Front-month July fell 0.175 cent to settle at 73.55 cents in an abbreviated trading session.

The August hog contract was still on track to post its first higher weekly close since mid-May, buoyed by hopes that the resumption of U.S.-China trade talks might spur fresh export sales of U.S. pork, as the Asian country struggles to contain an outbreak of African swine fever (ASF) in its hog herd.

Yet ample hog supplies continue to hang over the market, limiting rallies. The U.S. Department of Agriculture last week estimated the U.S. June 1 hog and pig herd at 75.5 million head, the highest June 1 inventory since estimates began in 1964.

“ASF will return to the headlines, but the hog industry is currently battling over-production in the short run,” INTL FCStone chief commodities economist Arlan Suderman said in a client note.

CME live cattle futures closed higher on Wednesday, with most-active August up 1.35 cents at 105.45 cents/lb. and October up 0.95 cent at 106.3 cents.

But CME feeder cattle futures fell as feed grain prices rallied. August feeders settled down 1.8 cents at 136.575 cents/lb., halting a three-session climb.

“Feeders were probably too strong yesterday — a little out of line,” said Alan Brugler, president of Brugler Marketing + Management.

U.S. markets including CME Group livestock futures will be closed on Thursday in observance of the Independence Day holiday. Trade resumes Friday.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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