Chicago | Reuters — Chicago Mercantile Exchange lean hog futures closed weaker on Monday, partly pressured by sell stops and fund liquidation, said traders.
February hogs ended 0.3 cent/lb. lower at 65 cents, and under the 10-day moving average of 65.267 cents (all figures US$). April closed 0.7 cent lower at 67.775 cents, and below the 20-day moving average of 68.115 cents.
Some selling occurred after futures drifted below moving averages, but it will not take much to put February back above the 10-day moving average, said Rosenthal Collins broker James Burns.
The morning’s soft cash and wholesale pork prices, amid adequate supplies, further pressured CME lean hogs, said traders.
However, they said some cash prices might draw support from profitable packer profits and potential production disruptions with the arrival of another winter storm in parts of the Midwest by Tuesday.
Monday morning’s cash hog price in Iowa/Minnesota averaged $63.35/cwt in light volume, 49 cents lower than on Friday, the U.S. Department of Agriculture said.
Separate USDA data on Monday morning showed the average wholesale pork price fell $1.07/cwt to $78.64 from Friday, mostly led by more than $3 lower hams.
Uneven live cattle futures
CME live cattle finished flat to mixed after investors sold deferred months and simultaneously bought nearby contracts, in a trading strategy known as bull spreads, said traders.
February live cattle closed unchanged at 120.25 cents. April ended up 0.2 cent to 119.175 cents and June down 0.1 cent to 108.6 cents.
Some investors implemented bull spreads based on futures’ discounts to last week’s strong cash prices.
But packers this week might avoid paying more for supplies given their poor margins.
Wednesday’s sale of about 5,500 animals at the Fed Cattle Exchange (FCE) is expected to set the cash price tone for other animals in the U.S. Plains later this week. The FCE cattle price last week averaged $120.50/cwt, up from the $119 average the week before.
Last week slaughter-ready, or cash, cattle in the U.S. Plains brought mostly $121 to $123, compared to mostly $120 a week earlier.
Average beef packer margins for Monday were a negative $63.45 per head, down from negative $40.20 on Friday, as calculated by HedgersEdge.com.
CME feeder cattle followed weaker live cattle futures.
January feeders, which will expire on Jan. 26, ended down 0.325 cent/lb. to 132.775 cents. March closed 0.6 cent lower at 130.675 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.