Chicago | Reuters — Chicago Mercantile Exchange lean hog futures gained as much as two per cent on Wednesday, reversing from earlier losses on strength from technical buying and a rebound in wholesale pork prices, traders said.
Hog futures tested life-of-contract lows reached last week but did surpass those lows, sparking short-covering. The opposite was true in cattle, with live and feeder cattle futures failing to top recent multi-week highs before each finished the session narrowly lower.
Hog prices still faced pressure from record-large U.S. supplies of hogs and pork as well as lacklustre retailer demand.
However, investors were taking profits on earlier bearish positions on ideas hogs may have reached at least a short-term bottom, Allendale Inc. analyst Rich Nelson said.
“Everyone — bulls and bears — are waiting for a rebound of some sort. Maybe we’ll get one even without a story,” Nelson said, noting a round of buying after hogs came within a few cents of their Aug. 4 lows.
Lean hog futures were further supported by midday U.S. Department of Agriculture data showing wholesale pork prices rising from the lowest levels since April.
Most-active CME October hogs settled up 0.775 cent at 58.975 cents/lb., a gain of 1.5 per cent and the biggest jump in 1-1/2 weeks (all figures US$). December hog futures rose two per cent while front-month August hogs touched a lifetime low before rallying, ahead of that contract’s expiration on Friday.
Live cattle for October delivery finished 0.075 cent lower at 114.925 cents/lb., capping an “inside day” on the charts in which prices did not surpass the previous session’s
high or low.
CME September feeder cattle were 0.35 cent lower at 148.5 cents/lb., easing after reaching a three-month high on Tuesday.
Cash bids for slaughter-weight cattle moving out of feedlots were beginning to circulate, and futures to some extent were waiting for cues of how cash trade would develop after Plains cattle last week traded up $2 at mostly $118/cwt.
Feedlots were offering fewer cattle for sale this week, and bullish traders were hopeful gains in cash markets could propel futures higher.
“Any steady cash trade… would be disappointing,” one cattle broker said.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.