Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose about two per cent on Monday on bargain buying after multi-month lows, but a large U.S. hog supply hung over the market, capping the rally, traders said.
CME July lean hog futures ended up 1.7 cents at 83.05 cents/lb. after dipping to 80.525 cents, its lowest price since March 11 (all figures US$). August hogs rose 1.625 cents to close at 82.25 cents/lb., rebounding off a three-month low set last week.
“After what we saw on Friday in the livestock sector, today just seems like more of a technical bounce than anything,” said Craig VanDyke of Top Third Ag Marketing. “We need a lot more follow-through to be excited about this market.”
Live cattle and feeder cattle futures also closed higher on Monday following declines last week.
CME August live cattle settled up 1.35 cents at 105.625 cents/lb., halting a three-session slide, while August feeder cattle ended up 1.4 cents at 136.925 cents/lb.
“We’ve got record on-feed numbers for cattle, and we had one of our largest pork production weeks two weeks ago. So the supply situation is ample, without any overly exciting demand news,” VanDyke said.
Cash beef values were soft. The U.S. Department of Agriculture (USDA) quoted the choice boxed beef cutout on Monday at $221.82/cwt, down 41 cents from Friday, while the select cutout fell 25 cents, to $202.51.
And despite Monday’s bounce, feeder cattle futures continued to face pressure from rising prices for corn, the primary feedgrain for livestock. Chicago Board of Trade corn futures set a fresh five-year high on Monday as poor weather continued to cast doubt on U.S. corn acreage and production prospects.
“Corn is going to continue to hamper the excitement. When you see the cost of gains for livestock, it makes it more difficult to be friendly,” VanDyke said.
— Reporting for Reuters by Julie Ingwersen in Chicago.