U.S. livestock: CME lean hogs slide as U.S. dollar surges

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange lean hogs closed lower on Friday in response to the U.S. dollar’s surge to a four-year high which tends to drive up costs for U.S. exports, including meat, traders said.

Positive U.S. monthly employment numbers helped send stocks on Wall Street up more than one per cent. The data also boosted the dollar.

Investors view the U.S. currency as a safe haven given slow economies elsewhere and global tensions, said Linn Group analyst John Ginzel.

CME hog market participants lightened October long positions in anticipation of a seasonal peak in cash prices as more livestock come to market at heavier weight, said traders and analysts.

U.S. Department of Agriculture Friday morning direct cash hog prices were unavailable. Hogs in the Midwest traded steady with Thursday’s sales, according to regional hog dealers.

Traders continue to monitor pork cutout values as slaughters rise and retailers buy product for October National Pork Month and for winter holiday ham business.

USDA’s data showed the morning’s wholesale pork price jumped $2.01 per hundredweight (cwt) from Thursday to $124.43, lead by higher pork belly costs (all figures US$).

The CME Group will cut electronic trading hours for its livestock markets effective Oct. 27, the exchange announced on Friday. [Related story]

October hogs closed 1.175 cents per pound lower at 105.6 cents, and December at 93.025 cents, down 1.9 cents.

Live cattle down from highs

CME live cattle futures sagged on profit-taking after reaching a record high for a third day in a row, mainly due to fund buying, traders said.

“The futures market is sending bad signals to the cash trade and inducing feedyards to hold cattle because they say they’re worth more,” said Ginzel.

Last week, market-ready, or cash, cattle in Nebraska sold at $157 to $159/cwt, with sales of $158 in Kansas.

Unprofitable packer margins, available cattle contracted against the futures market and beef competing against other meat proteins remain obstacles for cash prices.

Friday morning’s choice wholesale beef price gained 58 cents/cwt from Thursday to $239.03. Select fell 53 cents to $226.80, USDA said.

CME feeder cattle contracts settled mostly firm after investors sold the October contract and simultaneously bought back months in a spread strategy known as bear spreads.

Profit-taking and live cattle losses pulled down feeder cattle contracts from an earlier all-time high.

October closed down 0.225 cent/lb. lower at 240.875 cents. November finished 0.9 cent higher at 240.975 cents, and January up 0.85 cent to 234.725 cents.

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

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