Chicago | Reuters — Chicago Mercantile Exchange lean hogs on Wednesday closed up sharply, spurred by short-covering and escalating prices for slaughter-ready, or cash, hogs that reversed Tuesday’s market losses, said traders.
On Tuesday, some CME hog contracts day fell more than two per cent after Mexico imposed tariffs on U.S. pork following Washington’s higher import duties on Mexican steel and aluminum.
Fund buying and bargain hunting contributed to Wednesday’s market advances, traders and analysts said.
June hogs closed 1.65 cents/lb. higher at 78.175 cents, and July hogs ended 2.925 cents higher at 79.95 cents (all figures US$).
Both contracts finished above their respective 100-day moving average of 78.057 cents and 79.496 cents.
Packers paid more for hogs, despite single-digit margins, after recent hot weather in parts of the Midwest slowed animal weight gains, which delayed delivery to processors, said traders and analysts.
Processors also raised cash hog bids as grocers and restaurants purchased meat for June 17 Father’s Day advertisements, they said.
Live cattle extend gains
CME live cattle rose for a second straight day, fueled by short-covering and this week’s steady-to-firmer cash price outlook, traders said.
June live cattle closed 1.1 cents/lb. higher at 108.3 cents. August ended up 0.525 cent at 104.575 cents.
So far packers have tabled bids of $107/cwt for market-ready, or cash, cattle in the U.S. Plains versus $114-$115 asking prices. Last week, cash cattle overall in the Plains brought mostly $110.
No cattle changed hands at Wednesday’s Fed Cattle Exchange.
June cattle futures were driven by the likelihood of higher cash prices, as packers focus on supplying their needs while filling prebooked meat orders, said Cassandra Fish, author of industry blog The Beef.
“Packers, of course, are reluctant to give up any of their historically wide, triple-digit margin. But at least in most regions, higher money will be spent,” she said.
Live cattle futures advances and weaker corn prices pushed up CME feeder cattle contracts for a second day in a row. Low-cost corn reduces input costs for feedlot operators.
August closed up 0.9 cent/lb. higher at 147.025 cents.
— Reporting for Reuters by Theopolis Waters in Chicago.