Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose on Friday, with the most-active December contract jumping more than four per cent on short-covering at the end of the month and quarter, traders said.
CME October hogs settled up 0.875 cent at 62.175 cents/lb. and December rose 2.45 cents at 57.925 (all figures US$).
Traders booked profits by exiting long October/short December spread positions. The inverted spread has been widening for most of this month as traders bought October and sold December, expecting tighter hog supplies in the wake of Hurricane Florence, followed by an influx of supplies toward the end of the year.
The spread stretched to about six cents, premium October, on Thursday before narrowing on Friday.
“It looks like you had a lot of folks closing out, selling the October and buying the December,” said Dan Norcini, an independent livestock trader.
“It’s the end of the month and quarter. There is a lot of book-squaring going on, (and) some of that has nothing to do with the fundamentals,” Norcini said.
Hog futures drew light support after the U.S. Department of Agriculture late Thursday reported the U.S. hog and pig inventory at 75.5 million head, up three per cent from a revised year-ago figure of 73.3 million.
Analysts on average had expected an even bigger increase of 3.5 per cent.
“The report was not friendly, but I guess perhaps it wasn’t as bearish as some might have feared,” Norcini said.
CME live cattle futures followed the firm trend, with December and most other months posting contract highs on technical fund-driven buying, traders said.
CME October live cattle futures settled up 0.225 cent at 113.45 cents/lb. and most-active December ended up 0.275 cent at 118.850 cents, after reaching a life-of-contract high at 119.075 cents.
CME October feeder cattle finished up 0.325 cent at 158.175 cents/lb., supported in part by a drop in CBOT corn futures tied to bearish USDA quarterly corn stocks data.
After the close, fed cattle traded in Texas, Kansas and Nebraska at $111/cwt, steady with sales last week, traders said.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.