U.S. livestock: CME hogs end mixed on positioning before USDA report

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures settled mixed on Tuesday after investors adjusted positions before the U.S. Department of Agriculture’s (USDA) quarterly hog report on Thursday, said traders.

Analysts polled by Reuters, on average, estimated the U.S. hog inventory as of March 1 at 72.902 million head or 3.1 per cent higher than a year ago.

Thursday’s report will likely show continued herd growth, but lower hog prices may have tempered at least some of that pre-expansion enthusiasm, said independent CME livestock futures trader Dan Norcini.

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Recently prices for slaughter-ready, or cash, hogs have declined due to abundant supplies and futures’ retreat led by fears of a trade war between the U.S. and China.

Typically cash hog prices encounter headwinds in February and March when consumers are paying off year-end holiday debt, a Midwest hog farmer said. Furthermore meat demand in general tends to slow down during the Lenten season, he said.

But pork demand should pick up after Easter as consumers focus on cooking outdoors, said analysts and traders. April hogs closed down 0.275 cent/lb. at 57.75 cents (all figures US$). May finished up 0.2 cent at 65.45 cents.

Cattle futures uneven

CME April live cattle was supported by its discount to this week’s potential cash prices, but June was pressured by forecasts for increased supplies ahead, said traders.

A few market participants tweaked positions in perpetration for extended Easter holiday vacations, they said.

April live cattle closed up 0.25 cent/lb. at 115.425 cents, and June ended down 0.05 cents at 105.25.

Market participants await Wednesday’s Fed Cattle Exchange auction of roughly 400 animals. Last week, cash cattle in the U.S. Plains brought $125-$126.

A few meat processors might give employees off on Good Friday or Easter Monday, thereby limiting their need for supplies, a trader said.

Also, more cattle should come to market as warmer spring weather allows them to gain weight faster, he said.

Meat processors are banking that post-Easter holiday grilling will absorb copious amounts of affordable pork, beef and chicken available to grocery shoppers.

“U.S. pork keeps getting dirt cheap especially compared to beef,” said Norcini.

Short-covering and firmer deferred-month live cattle futures rallied CME feeder cattle contracts.

March feeders, which will expire on Friday, ended up 0.5 cent/lb. at 135.425 cents. Most actively traded April closed 0.85 cent higher at 135.35 cents.

Reporting for Reuters by Theopolis Waters in Chicago.

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