U.S. livestock: Profit-taking drops CME hog futures

Chicago | Reuters — Chicago Mercantile Exchange hog futures fell for the first time in eight sessions, pressured by profit-taking in anticipation of prices for market-ready or cash hogs topping out soon, traders said on Monday.

For more than a month, packers maintained steady or higher cash hog bids due to harsh wintry weather and the spread of the porcine epidemic diarrhea virus (PEDv) on U.S. farms.

Thinning pork packer margins, and grocers reluctant to buy pork at current prices, may force some processors to lower bids for hogs sometime this week, he said.

Hog futures also slid as investors pocketed profits ahead of the U.S. Department of Agriculture’s highly anticipated quarterly hog report on Friday. The data is expected to provide an official take regarding PEDv’s impact over the past three months.

USDA’s morning direct hog price data was not available. Hogs in the Midwest early on Monday traded steady to up $2 per hundredweight (cwt), hog dealers said (all figures US$).

Upward trending cash prices pushed CME’s lean hog index to an all-time high of 120.37 cents, surpassing the March 19 index of 118.46 cents.

Government data on Monday morning showed the price of wholesale pork at $130.99/cwt, down 51 cents from Friday’s $131.50 record high.

Pork packer margins for Monday were estimated at a positive $1.75 per head, compared with a positive $8.45 on Friday and a positive $11.10 a week ago, as calculated by HedgersEdge.com.

Fund liquidation surfaced after June futures fell below the 10-day moving average of 129.108 cents, which tripped sell stops.

April closed 1.025 cents/lb. lower at 124.65 cents, and June finished 2.125 cents lower at 128.2 cents.

Cattle shake off bearish report

CME live cattle futures ended firm, supported by their discounts to last week’s cash prices that offset Friday’s bearish USDA Cattle on Feed report, traders said.

Friday’s report showed more cattle placed in feedlots last month than expected as profitable margins allowed feedyards to bring in calves for fattening.

But tight supplies prompted packers to spend more for cattle at the detriment of their bottom lines.

“Packers have to rationalize paying up for cattle by raising the price they charge their customers for beef,” a trader said.

Last week, cash cattle in Texas and Kansas fetched $150/cwt, up $2 from the week before, feedlot sources said. Cash cattle in Nebraska sold at $152, steady to $1 higher than the previous week, they said.

The morning’s wholesale choice beef price rose 32 cents/cwt from Friday to $240.51 in light sales volume. Select cuts jumped $1.40 to $235.06, based on USDA data.

HedgersEdge.com calculated the beef packer margins for Monday at an estimated negative $0.35 per head, compared with a positive $10.30 on Friday and a positive $18.15 a week ago.

April live cattle closed up 0.15 cent/lb. to 144.15 cents, and June ended at 136.425 cents, up 0.3 cent.

Fund buying and strong deferred-month live cattle contracts lifted CME feeder cattle to a new high.

March ended up 1.675 cents/lb. to 176.7 cents, and hit a new contract high of 176.725 cents in electronic trading. April closed 1.025 cents higher at 176.3 cents.

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

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