U.S. livestock: CME lean hogs snap back from session lows

(Gloria Solano-Aguilar photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures finished higher on Thursday, after short-covering and bargain buying brought contracts from morning lows, traders said.

“Hogs (futures) were simply too cheap. The price had gotten to the point where (investors) had wrung out any sort of spring seasonal rally,” said independent CME livestock futures trader Dan Norcini.

Futures later garnered more support from technical buying that replaced initial selling following lower cash and wholesale pork prices.

Wednesday morning’s average cash hog price in Iowa/Minnesota was $66.54/cwt, down $1.59 from Tuesday, the U.S. Department of Agriculture said (all figures US$).

Separate USDA data on Wednesday morning showed the average wholesale pork price down $1.21/cwt, to $77.83, from Tuesday, following $5.02 lower pork belly prices.

Packer inventories are full for the week, but they want to process as many hogs as possible given their profitable margins, a Midwest hog dealer said.

An analyst said pork belly prices have to come down to encourage product storage for summer use.

April hogs ended 1.2 cents/lb. higher at 69.35 cents, and above the 10-day and 40-day moving average convergence level of 69.24 cents. May closed up 1.425 cents to 73.95 cents, and above the 10-day moving average of 73.933 cents.

Lower cattle futures

Profit-taking and trepidation before Friday’s USDA monthly Cattle on Feed report pulled CME live cattle futures down from morning highs, said traders.

Analysts, on average, expect Friday’s report to show fewer cattle were placed in U.S. feedlots last month than a year ago.

April live cattle closed down 0.675 cent/lb. to 121.775 cents, and June finished 0.975 cent lower at 112.8 cents.

Wednesday’s Fed Cattle Exchange cash price of $133.35/cwt, up nearly $5 from last week, encouraged sellers elsewhere in the U.S. Plains to hold out for more money.

Slaughter-ready, or cash, cattle bids in Texas and Kansas were at $126 and $133/cwt in Nebraska versus up to $134 asking prices, said feedlot sources. Cash cattle in the U.S. Plains last week brought mostly $128 to $131.

Areas of tight cattle supplies, generally good wholesale beef demand and triple-digit packer profits bode well for cash prices, a trader said.

Nonetheless, market participants are aware of a potential seasonal supply increase soon, he added.

CME feeder cattle bowed to profit-taking and live cattle futures losses.

March feeder cattle ended down 0.3 cent/lb. at 133.7 cents.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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