Chicago Mercantile Exchange (CME) hog futures dropped on Monday as Chinese economic worries sparked active selling in that market as well in a vast number of other commodities, analysts and traders said.
Gold led losers, its worst two-day setback in 30 years, in response to weaker-than-expected data out of China that sparked concerns about the global financial outlook.
“Throw in the outside markets, and there was no good news out there,” said R.J. O’Brien hog futures trader Tom Cawthorne. He and others cited the recent downturn in cash hog prices and wholesale pork price volatility.
Packers resisted raising cash hog bids while trying to realign their margins. And the cold, wet start to spring postponed backyard grilling to undercut wholesale pork values.
The U.S. Department of Agriculture on Monday morning reported the average hog price in the most-watched Iowa/Minnesota market tumbled $3.49 per hundredweight (cwt) from Friday at $75.41 (all figures US$). The price has fallen $6.62 since last Wednesday.
Monday morning’s USDA mandatory wholesale pork price, calculated on a plant-delivered basis, was $81.91/cwt, up 74 cents from Friday. Friday’s price was down $1.24 from Thursday.
U.S. pork packer margins on Monday were estimated at a negative 50 cents per head versus a negative $2.65 on Friday and a negative $5.40 a week ago, according to HedgersEdge.com.
CME hog and live cattle traders dumped deferred-month long positions as Chicago Board of Trade corn drifted lower. Lower-priced corn could cause hog and cattle producers to feed more animals and to heavier weights.
CME June hogs settled 1.3 cents lower at 88.6 cents per pound. July finished at 88.725 cents, down 1.175 cents.
Dow drags down live cattle
Live cattle futures followed the path of least resistance after the stock market at one point plunged nearly two per cent roiled by global economic fears, traders and analysts said.
“Cattle tried to hold on their own merit but became a victim of everything else going on around it,” said R.J. O’Brien floor manager Jim Brooks.
Cool, wet weather has pressured wholesale beef prices as it delayed spring cookouts. That also has put cattle and hog investors on the defensive as meat sales typically increase in the spring.
“Even though the calendar told us spring started almost a month ago, the actual weather in many areas acts more like winter,” said Hales Cattle Trading Co. president David Hales.
“Cold and wet conditions have delayed grilling season and delayed price advances in the beef market as a result,” he said.
USDA Monday morning quoted the average wholesale choice beef price at $189.46/cwt down six cents from Friday; select cuts slipped 34 cents to $183.80.
Investors await the tally of cash-basis cattle available for sale this week. Cash cattle last week fetched $127-$128/cwt, $1-$2 lower than the previous week.
Poor margins will again play a role in how much packers will spend for supplies, a trader said. And, an improvement in cash may not happen until processors are able to move fresh meat for grilling, he said.
U.S. beef packer margins on Monday were estimated at a negative $62.70 per head versus a negative $53.55 on Friday and a negative $45.30 a week ago, according to HedgersEdge.com.
Spot April live cattle closed 0.8 cent/lb. lower at 125.05 cents. Most-actively traded June ended down 0.925 cent at 119.825 cents.
Feeder cattle futures posted losses for a fifth consecutive session as the lower live cattle market weighed.
Spot April feeder cattle settled down 1.325 cents/lb. at 136.6 cents. Most-actively traded May closed at 139.8 cents, 1.125 cents lower.
— Theopolis Waters writes for Reuters from Chicago.