Chicago | Reuters — Chicago Mercantile Exchange lean hog futures on Monday hit a 1-1/2-month high, spurred by expectations for stronger near-term cash prices, said traders.
They said technical buying contributed to market advances.
December hogs closed up 0.75 cent per pound, to 51.5 cents (all figures US$). Most actively traded February ended 0.775 cent/lb. higher at 54.8 cents and above the 20-day moving average of 54.689 cents.
Monday morning’s prices for cash hogs in the U.S. Midwest were mostly $1 per cwt higher, fuelled by extremely profitable packer margins and decent pork demand, regional hog dealers said.
Monday’s average pork packer margins were estimated at $46.70 per head, down from a positive $50.75 on Friday, according to consultancy HedgersEdge.com.
The morning’s wholesale pork price, or cutout, on Monday rose 72 cents/cwt from Friday to $73.97, the USDA said.
Some processors may be having problems shoring up supplies as temperatures across much of the Midwest turn colder, which slows down animal weight gains, said analysts and hog merchants.
They are closely tracking USDA’s pork cutout values for indications that retailers are almost finished buying hams for the Christmas and New Year’s holidays.
Uneven live cattle close
CME live cattle market participants sold December futures and simultaneously bought the February contract while awaiting possibly softer cash prices later this week, said traders.
December live cattle closed down 0.4 cent/lb. to 107.825 cents, and February ended up 0.1 cent lower at 108.975 cents.
“Beef margins are not as rosy as they are for pork packers,” an Iowa hog merchant said. He cited higher cash prices in recent weeks and inconsistent wholesale beef demand as reasons for much slimmer beef packer profits.
HedgersEdge estimated Monday’s average pork packer margins at a positive $7.05 per head, down from a positive $28 on Friday and down from a positive $45.50 a week ago.
Last week, packers paid $114 to $115/cwt for slaughter-ready, or cash, cattle in the U.S. Plains that a week earlier brought $110-$113.
Monday morning’s choice wholesale beef price jumped 79 cents/cwt from Friday to $190.51. Select cuts were up 61 cents, to $173.31, USDA said.
Sharply higher corn futures and steady to $2/cwt lower cash feeder cattle prices weighed on CME feeder cattle contracts. January feeders ended down 0.275 cents/lb., to 124.325 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.