U.S. livestock: Fund buying pushes CME hogs two per cent higher

Chicago | Reuters — Chicago Mercantile Exchange hog futures jumped two per cent on Wednesday, with some months up the three-cent limit, driven by fund buying after contracts punched through moving average levels, traders said.

May hogs closed up 2.95 cents per pound at 123.975 (all figures US$).

June and July ended up their three-cent limit at 126.25 and 124 cents, respectively. Both months landed above their 20-day moving averages of 123.951 cents and 121.037, respectively.

Futures received more lift from short-covering after wholesale pork values and prices for market-ready, or cash hogs, moved higher.

Wednesday afternoon’s average hog price in the closely watched Iowa/Minnesota market rose 48 cents per hundredweight (cwt) to $116.20, according to the U.S. Department of Agriculture.

Separate government data showed the afternoon’s wholesale pork price gained 32 cents/cwt from Tuesday to $117.41.

Some packers need hogs for Saturday to make up for downtime during Monday’s extended Easter holiday observances. And, grocers are preparing to feature pork for spring grilling demand.

Speculators bought deep deferred months in the belief that higher Chicago Board of Trade corn prices might discourage producers from feeding hogs to heavier weight, which is supportive to cash prices.

Still, some investors are nervous about futures’ bearish premium to CME’s hog index, which is at 118.48 cents.

Cattle up with beef

Steadily rising beef cutout values and futures’ discount to last week’s slaughter-ready, or cash, cattle prices lifted CME live cattle futures, traders said.

Wednesday afternoon’s wholesale choice beef price, or cutout, was up $1.43/cwt from Tuesday at $232.64. Select cuts rose $1.05 to $220.67, based on USDA data.

Reduced slaughter rates during the Easter holiday resulted in less beef for retail buyers. Packers also curtailed production to offset tight cattle supplies.

From Monday to Wednesday, packers processed 334,000 head of cattle, down 14,000 from last week and 34,000 fewer than a year ago.

Investors await this week’s cash cattle sales and the government’s monthly cattle-on-feed report on Friday.

Analysts expect the number of cattle placed in feedyards in March likely increased 0.8 per cent from a year ago due to record-high prices for market-ready cattle.

Strong beef demand and improved packer margins bode well for cash cattle prices, but more cattle for sale might limit potential cash advances.

HedgersEdge.com calculated the beef packer margins for Wednesday at an estimated negative $26.25 per head, compared with a negative $45.15 on Tuesday and a negative $116.75 a week ago.

Last week, cash cattle in Texas and Kansas fetched $147/cwt, and at $148 in Nebraska, feedlot sources said.

April live cattle closed up 0.225 cent/lb. to 143.925 cents, and June ended at 135.1 cents, up 0.125 cent.

CME feeder cattle drew support from firm live cattle futures and steady to $2 higher prices for cash feeder cattle in local markets.

May closed 0.275 cent/lb. higher at 178.625 cents, and August ended up 0.175 cent to 182.45 cents.

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

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