Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures dropped as much as 3.7 per cent on Wednesday, skidding to the lowest levels in two months on pressure from chart-based selling and ample U.S. hog supplies, traders said.
Hog prices on Tuesday had dipped below their closely watched 200-day moving average and on Wednesday fell below the support level of lows notched late last month, triggering more selling.
“There’s a lot of technically based selling here … and the fundamentals are not there to support the cash market,” said Midwest Marketing Solutions broker Brian Hoops.
February hog futures declined by the most since Nov. 6, settling 2.1 cents lower at 60.05 cents/lb. (all figures US$). The April contract eased 1.875 cents, to 65.075 cents. Hogs in the top cash market of Iowa and southern Minnesota edged up 44 cents, to $51.91/cwt, according to the U.S. Department of Agriculture.
In the cattle market, live cattle futures climbed to life-of-contract highs for the third consecutive session, boosted by expectations that harsh winter weather moving into the Plains would hamper weight gains and shipments of the animals. Lower cattle weights reduce the overall supply of cattle.
Conditions at some feedlots already were muddy after heavy snowfall and rainfall last week in parts of the region. That limited demand for cattle moving into feedlots and could push up prices for fattened cattle sold out of the lots to slaughterhouses, traders said.
CME February live cattle, which reflect cattle that soon will be slaughtered, rose to a contract high of 127.95 cents/lb. before settling at 127.825 cents, up 0.875 cent.
Meanwhile, CME March feeder cattle declined to a one-week low 143.05 cents/lb., ultimately settling down 0.05 cent at 144.7 cents.
“For the first time in two years, we have a true weather market on our hands, with feedyards battling very poor feed conditions and more winter wheat on its way this week,” INTL FCStone said in a market note.
The National Weather Service warned of bitter-cold temperatures in a large part of the central U.S. The northern Plains would have high temperatures remaining below 0 F on Friday, nearly 25 degrees below normal, the NWS said.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.