U.S. livestock: CME lean hogs end lower on soft cash market, heavy weights

Chicago | Reuters — Chicago Mercantile Exchange lean hog contracts closed lower on Wednesday pressured by soft prices in the cash hog market as heavy weight hogs also dragged on futures, traders said.

The front-month June contract traded at a premium to the CME lean hog index of 110.34, which also weighed. The CME June contract closed down nearly one per cent to a three-month low.

The U.S. Department of Agriculture data showed the national average weighted hog prices at $107.70 per hundredweight (cwt) on Wednesday, 36 cents lower than the previous day (all figures US$).

“Packers don’t seem to be in a hurry to bid up the cash market. And there are very heavy weight hogs, a lot of tonnage when you talk about the total amount of pork production,” said Dan Norcini, an independent livestock futures trader.

Early on Wednesday the USDA released Iowa-Minnesota average hog weights for the week ended May 31 at 286.7 pounds, unchanged from the previous week, but up 10 lbs. from a year ago.

“The reduction in hog slaughter is not impacting the market like some predicted because of the heavy weights,” Norcini said.

June hogs, which expires mid-month, ended down 1.05 cent/lb. at 112.55 cents. July closed down 0.8 cents at 121.5.

Cattle end mixed

CME live cattle closed narrowly mixed on Wednesday as expectations of lower cash prices weighed while lighter slaughter volume lent some support, traders said.

There were some unconfirmed bids of $142/cwt for cash cattle in Texas, a trader said. Last week, cash cattle traded at $143 in the U.S. Plains.

“The lower bids are pressing the front-month, but slow slaughter is positive for futures. It is an indication of tight supplies and is keeping the August contract elevated,” said Domenic Varricchio, a commodities broker at Schwieterman, Inc.

USDA estimated week-to-date cattle slaughter at 348,000 head, 26,000 head less than in the same period last year.

Wednesday afternoon’s wholesale choice beef price fell 55 cents/cwt from Tuesday to $232.11. Select cuts rose one cent to $223.86, according to U.S. Department of Agriculture data.

June, which expires at the end of the month, ended at 138 cents, down 0.35 cent. August closed at 140.175 cents, up 0.1 cent.

Tight supplies, good pasture and weak corn prices supported CME feeder cattle, a trader said.

August ended at 198.775 cents, up 0.475 cent higher and September at 199.5 cents, up 0.725 cent.

— Meredith Davis reports on ag commodity markets for Reuters from Chicago.

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