Chicago / Reuters – Chicago Mercantile Exchange lean hogs closed higher on Tuesday on short-covering ahead of the Christmas holiday and before the U.S. Department of Agriculture’s quarterly hog report at 2 p.m. CST (2000 GMT), traders said.
Analysts expect the report, which will be released while Globex hog futures are trading, to show herd growth in the last quarter.
February closed up 1.400 cents per lb to 81.650 cents, and April was 1.250 cents higher at 83.800 cents.
Initial fund buying surfaced in the April contract after it moved beyond the 10-day moving average of 83.90 cents.
Futures rose despite slumping prices for market-ready or cash hogs due to ample supplies as packers prepared to close plants during the Christmas and New Year’s holidays.
Tuesday morning’s average price of hogs in the Iowa/Minnesota market was at $72.40 per cwt in light volume, down $1.53 from Monday.
Packers may process more than 270,000 hogs on Saturday to make up for this week’s holiday downtime, according to hog dealers and futures traders.
Live cattle down, but off lows
CME live cattle finished flat to weaker, pressured by pre-holiday profit-taking while higher wholesale beef prices lifted futures from session lows, traders said.
On Tuesday morning, choice wholesale beef price surged $3.22 per cwt from Monday to $242.58. Select gained $1.29 to $231.51, based on USDA data.
Grocers are likely to try to stock up on beef before it becomes less available after plants shut down during the holidays, a trader said.
Bullish traders believe packers will pay the same or better money for market-ready or cash cattle, given the recent increase in wholesale beef demand and the three-day run-up in futures prices prior to Tuesday.
Market bears contended that packers will avoid raising cash bids based on their poor, but improved margins, and plant closures over the next two weeks.
Cash cattle bids in Kansas stood at $159 per cwt versus asking prices of $161 to $162 in the U.S. Plains, according to feedlot sources.
Beef packer margins for Tuesday were a negative $83.15 per head, compared with a negative $113.70 on Monday and a negative $102.40 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
CME feeder cattle finished down sharply on sell stops, profit-taking and live cattle futures weakness.
January closed down 3.375 cents per lb at 217.125 cents, and March was 3.700 cents lower at 215.275 cents. (Editing by Jeffrey Benkoe)