Chicago | Reuters — Chicago Mercantile Exchange hog futures marked a new high on Monday, with some trading months up by their three-cent price limit, led by record-high wholesale pork prices in anticipation of tight supplies pegged to the deadly U.S. pig virus, traders and analysts said.
Analysts estimated that at least four million piglets died from the porcine epidemic diarrhea virus since it was first discovered in the U.S. in May 2013. Losses from the virus are expected to reduce hog production beginning this spring through year-end.
The U.S. Department of Agriculture on Monday forecast March pork production down marginally from February as fewer hogs offset higher carcass weights.
Monday afternoon’s cash hog price in the closely-watched Iowa/Minnesota market was $1.15 higher at $108.44, according to USDA (all figures US$).
Government data showed the morning’s price of pork at wholesale at $114.94 per hundredweight (cwt), which surpassed Friday’s $111.99 record.
Separate government data on Monday showed pork exports in January at 442.1 million pounds, down 2.8 per cent from December and up 4.5 per cent from a year ago.
Funds in CME’s livestock markets sold April long positions and bought deferred months, a process known as the “roll” by followers of the Goldman Sachs Commodity Index (S+PGSCI). Monday was the second of five days for the S+PGSCI procedure.
April and June finished three cents/lb. higher at 116 cents and 123.5 cents, respectively.
Live cattle mostly up on fund roll
CME live cattle moved mostly higher as funds rolled April contracts mostly into June futures, traders said.
Traders also sold April in anticipation of weaker cash cattle prices this week as packers pull from animals contracted against the futures market.
Deferred-month live cattle drew support from their discounts to recent cash prices and buying in the neighboring CME hog market, a trader said.
Last week, cash cattle in Texas and Kansas moved at $148/cwt, and $150 in Nebraska, feedlot sources said.
The morning’s wholesale choice beef price rose $1.72/cwt from Friday to $237.74. Select cuts jumped $1.95 to $234.82, based on USDA data.
On Monday, USDA projected March 2014 beef production up less than one per cent from February based on continued relatively large cattle placements in the first quarter.
Government data put beef exports in January at 201.6 million lbs., down 11.5 per cent from the month before and up 5.3 per cent from a year earlier.
April live cattle closed 0.1 cent/lb. lower at 143.15 cents. June closed at 136.4 cents, up 0.525 cent and August ended 0.6 cent higher at 134.45 cents.
CME feeder cattle drew support from lower corn prices and higher cash prices.
March ended 1.325 cents/lb. higher at 173.7 cents. April closed 2.075 cents higher at 175.725 cents, and hit a new contract high of 175.8 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.