Chicago | Reuters — Chicago Mercantile Exchange lean hog futures on Monday settled higher for a third consecutive session, with strength from buy stops and firmer wholesale pork values on the final trading day for the month, traders said.
Most actively traded December lean hogs closed 1.15 cents/lb. higher at 47.95 cents (all figures US$).
Monday morning’s wholesale pork price, or cutout, rose $1.08/cwt to $73.97 from Friday, the U.S. Department of Agriculture said.
“The cutout held and processors are satisfied with their margins. If product goes down after October Pork Month, it’ll take cash prices down with them,” a Midwest hog merchant said.
Monday morning’s cash hog prices in the U.S. Midwest were mostly steady, said regional hog merchants.
Packers on Monday processed 460,000 hogs, 17,000 more than a week ago, according to USDA estimates.
Traders said Monday’s hog slaughter suggests Smithfield Foods’ Tar Heel, North Carolina plant resumed full production after it had closed late last week due to “operational issues” as a result of Hurricane Matthew.
Traders and Midwest hog merchants said USDA’s Monday kill may have also included a Sunday slaughter by a Midwest plant that was idled by equipment repairs last Friday and Saturday.
Weaker live cattle settlement
CME live cattle futures were weakened by sell stops and profit-taking, said traders.
Investors sold October futures and simultaneously bought deferred contracts in a trading strategy known as bear spreading.
October live cattle, which expired at noon CT, closed 1.1 cents/lb. lower at 103.1 cents. Most actively traded December ended 1.025 cents lower at 103.325 cents.
Market participants await this week’s sale of slaughter-ready, or cash, cattle that last week fetched $104 to $105/cwt, as much as $5 higher than the week before.
The potential that supermarkets will soon began featuring beef after Pork Month, and as an alternative to ham and turkey over the winter holidays, could bode well for cash returns.
Investors are further encouraged by the long stretch of extremely profitable packer margins.
Monday morning’s choice wholesale beef price climbed $1.22/cwt from Friday to $184.33. Select cuts surged $3.02, to $173.18, the USDA said.
CME feeder cattle closed mixed, pressured by live cattle market weakness but supported by higher cash feeder cattle prices.
November feeders finished up 0.3 cent/lb. to 121.85 cents, January unchanged at 116 cents and March closed 0.875 cent lower at 112.275 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.