Chicago Mercantile Exchange hog futures settled sharply lower on Tuesday on fund liquidation and technical selling with spot December ending down 1.39 per cent, traders said.
Front month December hogs, which expires Dec. 18, fell to a three-month low to finish down 1.2 cents at 84.825 cents per pound (all figures US$).
December’s nearly three-cent premium to the CME’s lean hog index of 81.88 cents also dragged on the contract.
Pork packers have reduced demand for hogs, with a lack of cash bids putting pressure on hog futures, a Chicago-based trader said.
The U.S. Department of Agriculture reported a slightly softer wholesale pork price, or cutout, at $90.70 per hundredweight (cwt), down 83 cents from Monday.
“Retailers will be completing purchases for the Christmas holiday soon. Once that occurs, there will be very little need for hams until early next spring,” said Dan Norcini, an independent livestock futures trader.
“That will tend to bring pressure into the cutout as both hams and picnics will drop sharply in price,” he said.
February hogs closed down 1.6 per cent, or 1.475 cents, at 88.975 cents.
CME cattle edge lower
CME live cattle futures settled lower on Tuesday pressured by technical selling, traders said.
Funds continued to exit long positions ahead of first notice day on Dec. 9. Some investors sold the December contract, which expires Dec. 31, and bought deferred months, which limited losses in the February and April contracts, traders said.
A weak short-term outlook for beef also weighed. Consumer demand for beef may pick up near the Christmas holiday, but otherwise is not expected to steadily increase until the next year, analysts have said.
“The week after Thanksgiving meats always have it tough,” said Domenic Varricchio, commodities broker at Schwieterman, Inc.
USDA’s Tuesday morning wholesale beef price, or boxed beef, was $202.59/cwt for choice cuts, up 47 cents from Monday. Select cuts slipped 95 cents to $190.53/cwt.
Winter weather is in focus as forecasts are for sub-zero temperatures on Friday and Saturday in portions of the U.S. Plains and Midwest. The cold will likely slow cattle weight gains.
December cattle futures settled down 0.725 cent at 132.525 cents/lb. February cattle settled down 0.175 cent at 134.1 cents.
Feeder cattle futures settled lower following live cattle futures. Front month January traded at a premium to the CME’s feeder index of 165.88 cents/lb., which also dragged on the front month contract.
Feeder cattle prices at the closely followed Oklahoma City auction were $2 to $4/cwt lower on Tuesday, according to USDA data.
January feeder cattle settled down 0.5 cent at 164.85 cents/lb., and March settled down 0.425 cent at 165.25 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.