U.S. livestock: Profit-taking drags down CME hog futures

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange hog futures fell hard on profit-taking after spiking to a new high driven by record-high wholesale pork values and strong prices for slaughter-ready hogs, traders said.

Wednesday morning’s wholesale pork price, or cutout, surged $2.51 per hundredweight (cwt) from Tuesday to $134.04, surpassing the April record of $133.74, according to U.S. Department of Agriculture data (all figures US$).

The cutout bounce reflects last-minute meat purchases by grocers looking to feature product for the July 4 holiday, a trader said.

USDA’s morning direct hog prices were unavailable. Cash hogs in the Midwest sold steady to up $2/cwt as packers actively bought supplies for next week, hog dealers said.

They said processors may pressure hog bids soon with plants scheduled to be closed at least one day for the holiday.

Fund liquidation and sell stops hastened futures losses.

Jitters before the government’s quarterly hog report on Friday severely undercut deferred CME hog contracts.

Analysts expect Friday’s data to show the pig virus reduced U.S. hog supplies while fuelling herd expansion due to high hog prices and cheaper feed costs.

July hogs closed down 1.125 cents per pound to 129.3, and August 2.425 cents lower at 128.65.

Cattle rise with record beef prices

CME live cattle closed higher after choice beef prices reached an all-time high following the same feat by select cuts on Tuesday, traders and analysts said.

The morning wholesale price for choice beef rose $1.90/cwt higher to $245.56, eclipsing the March record of $244.08. Select beef was at $238.28, down six cents from Tuesday’s record, based on USDA data.

“Surging beef prices obviously suggest demand is proving very strong, but one also has to suspect the usual seasonal surge in cattle marketings isn’t proving very large either,” said Doane Advisory Services economist Dan Vaught.

Record beef prices, futures’ gains and profitable packer margins stirred expectations for steady-to-higher prices for market-ready, or cash, cattle this week.

Last week, cash cattle in Texas and Kansas moved at $150/cwt, and $148 to $150 in Nebraska.

Beef packer margins for Wednesday were at positive $99.14 per head, compared with a positive $92.15 on Tuesday and a positive $47.80 a week ago, as calculated by industry analytics firm HedgersEdge.com.

June live cattle finished 0.8 cent/lb. higher at 151.95 cents, and August up 0.925 cent to 150.65 cents.

CME feeder cattle scored a new high for a second consecutive session, helped by higher live cattle futures, fund buying and weak corn prices.

August closed up 1.5 cents/lb. at 212.125 cents, and September at 213.9 cents, 1.7 cents higher.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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