U.S. livestock: Fund buying helps CME hogs close mostly higher

Chicago | Reuters — Chicago Mercantile Exchange hogs closed mostly higher on Tuesday, with support from fund buying that helped most contracts beat back early-session losses, traders said.

Short-covering contributed to overall CME hog advances.

May futures could not overcome their bearish premium to CME’s hog index, at 116.83 cents, and lacklustre demand for market hogs and pork at wholesale.

The Tuesday morning average hog price in the eastern Midwest direct market fell $1.26 per hundredweight (cwt) from Monday to $107.53, according to the U.S. Department of Agriculture (all figures US$). Direct market hog prices elsewhere were unavailable.

Separate USDA data showed the morning’s wholesale pork price dropped $1.40/cwt from Monday to $117.01, largely weighed by lower pork belly costs.

Speculators bought back-month CME hogs in anticipation of a summer seasonal decline in supplies, further squeezed by the spread of the porcine epidemic diarrhea virus on U.S. farms.

Tuesday’s Chicago Board of Trade corn price jump, driven by the slow pace of planting, enticed back-month hog futures buyers. They bet that expensive corn would cause hog farmers to feed animals to lighter weight, which is supportive for cash prices.

May hogs closed 0.7 cent/lb. lower at 120.275.

Most actively traded June ended 1.05 cents higher at 125.275, and above the 40-day moving average of 124.796 cents. July ended 1.475 cents higher at 124.225 cents.

Cattle up with discounts

CME live cattle gained modestly, supported by their bullish discount to last week’s cash prices, traders said.

They said investors sold April futures before they expire on Wednesday and simultaneously bought the June contract.

April live cattle closed up 0.1 cent/lb. at 145.5 cents, and June ended at 137.025 cents, 0.2 cent higher.

Futures chopped around as traders adjusted positions before the last trading day of the month on Wednesday, while waiting for cattle in the cash market to change hands.

Unsold cattle from last week could increase the number of available supplies this week, which could weigh on cash prices, traders said. Lukewarm wholesale beef demand and unprofitable packer margins may limit cash spending.

Last week, cash cattle in Texas and Kansas moved at $145-$146/cwt, with $146-$148 sales in Nebraska, feedlot sources said.

Tuesday morning’s wholesale choice beef price rose $1.28/cwt from Monday to $234.45. Select cuts dropped 41 cents to $221.16, based on USDA data.

HedgersEdge.com calculated the beef packer margins for Tuesday at an estimated negative $7.60 per head, compared with a negative $12.10 on Monday and a negative $45.15 a week ago.

CME May feeder cattle drew pressure from higher corn values. Strong cash feeder cattle prices in local markets lifted remaining feeder cattle contracts.

May closed 0.525 cent/lb. lower at 180.575 cents. August ended up 0.2 cent at 186.55 cents, and September 0.250 cent higher at 187.05 cents.

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

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