Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures closed higher on Wednesday in light bargain-buying after last week’s slide to three-month lows, but soft cash markets and ample hog supplies hung over the market and limited rallies, traders said.
CME July lean hog futures settled up 0.15 cent at 81.625 cents/lb. and most-active August ended up 1.3 cents at 83 cents/lb. (all figures US$).
“There’s not a lot of conviction on any side of the market,” one Chicago-based trader said, noting that the pork cutout fell more than $3/cwt on Wednesday.
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“The other thing affecting the hogs is the huge kills. They are killing so many hogs here,” the trader said, adding, “People have been whipped around here. They wanted to be long, but the fundamentals are not going along with them.”
Traders awaited weekly export sales data on pork and beef due Thursday from the U.S. Department of Agriculture (USDA), with some hoping the report might show fresh sales of U.S. pork to China as the Asian country struggles with an epidemic of African swine fever in its hog herd.
Live cattle futures closed lower on weak cash values and lackluster consumer demand for high-priced cuts of beef, traders said.
CME most-active August live cattle settled down one cent at 104.55 cents/lb.
CME August feeder cattle ended down 0.725 cent at 136.525 cents/lb.
Packers in Texas and Kansas were bidding $109/cwt for cash cattle, steady with Tuesday, while sellers were asking $112-$115, traders said.
Cash beef values firmed a bit. USDA quoted choice boxed beef cutout on Wednesday at $221.59/cwt, up $1.06 from Tuesday, while select cutout rose 44 cents, to $202.24.
But some traders felt that live cattle futures would struggle until the cash cattle market establishes a seasonal low.
“It doesn’t seem like there is a need to pay up for cattle today… Honestly, it’s going to take more than the boxes to turn this around and get us moving higher,” the Chicago trader said.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
