Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures ended mixed on Wednesday, with the thinly traded June contract rising to a seven-year high as strong domestic demand continues to underpin prices even as export prospects wane, traders said.
The most-active hog futures contract eased on profit-taking but remained near the peak it hit earlier this week.
China’s state planner said on Wednesday it aimed to use state reserves of pork to stabilize hog production and prices, after a more than 50 per cent plunge in pork and hog prices since the beginning of the year.
“It is their way of signaling to the market that pork prices have moved low enough, and offering some support to producer margins which have moved to below breakeven levels,” brokerage StoneX said in a note to clients.
July hog futures settled 0.3 cent lower at 121.5 cents/lb. (all figures US$). Technical support was noted at the contract’s 10-day moving average.
June hogs gained another 1.25 cents to settle at 121.95 cents. Prices peaked at 121.975, the highest on a continuous basis for the front-month contract since July 2014. The pork cutout ended at $134.38/cwt, down 0.56 cent from Tuesday.
In the beef market, August live cattle futures ended up 0.45 cent at 118.275 cents/lb. at the CME. August feeder cattle closed 0.975 cent lower at 148.275 cents/lb.
August feeder cattle hit resistance at its 10-day moving average. Support was noted at the low end of the contract’s 20-day Bollinger range, a key technical point it has not closed below since April 22.
Wholesale beef prices rose, with select cuts rising $1.69, to $307.87/cwt, according to the U.S. Department of Agriculture. Choice cuts rose four cents to $338.65/cwt.
— Mark Weinraub is a Reuters commodities correspondent in Chicago.