Chicago Mercantile Exchange (CME) hog futures closed higher on Tuesday with support from higher cash hog prices, said analysts and traders.
Nearby CME hog contracts benefited from bullish spreads with the view that less-expensive corn might cause some producers to feed more animals and thus pressure prices later this year.
Still, slack wholesale pork demand stirred periodic selling into market rallies. And some buyers were leery of futures’ premium to CME’s lean hog index at 74.69 cents per pound (all figures US$).
Spot April hogs closed at 79.5 cents, up 1.025 cents. Most-actively traded June was 0.3 cent higher at 91.065 cents.
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“Packers may be looking ahead to warmer weather after Easter stoking grilling demand,” a trader said.
U.S. Department of Agriculture on Tuesday quoted the average cash hog price in Iowa/Minnesota at $74.52 per hundredweight (cwt), up $1.43 from Monday, according to USDA.
Separate government data showed the average wholesale pork price on Tuesday at $77.59/cwt, down 37 cents from Monday.
Packing plants are scheduled to be closed for the Good Friday holiday on March 29.
Processors will need hogs for Saturday’s slaughter estimated by industry sources at around 90,000 head. Last year Easter fell on April 8 and packers processed 81,300 on April 7, the sources said.
Investors await the government’s quarterly hog report on Thursday (March 28). Analysts expect the data to show modest hog herd expansion during the December-February quarter.
Live cattle down with beef prices
Lower wholesale beef prices pressured CME live cattle futures and could keep a lid on cash cattle values, analysts and traders said.
The price for wholesale choice beef on Tuesday was off 15 cents/cwt to $190.43; select cuts fell $1.04 to $189.17, according to USDA.
“We pretty much know what cash is going to do, it’s the beef demand that’s keeping everybody on the defensive,” a trader said.
A light number of cattle traded in Texas at $125/cwt, which fully steady with a last week, a feedlot manager said. There were no cash bids or asking prices reported elsewhere in the U.S. Plains, he said.
April live cattle closed 0.5 cent/lb. lower to 125.95 cents. June was down 0.325 cent to 121.15 cents.
CME March feeder cattle were influenced by ideas about where they and CME’s feeder cattle index will converge when the spot month expires on Thursday.
Weaker corn prices propped up April feeder cattle futures — and live cattle market losses dragged on remaining feeder cattle contracts.
Spot March feeder cattle settled up 0.125 cent/lb. to 134.85 cents. Most-actively traded April ended at 138.6 cents, 0.2 cent higher. May closed down 0.05 cent to 140.475 cents.
— Theopolis Waters writes for Reuters from Chicago.
