Friday was the final day of the five-day roll for funds tracking Standard + Poor’s Goldman Sachs Commodity Index, and investors moving out of front months helped to prop up some deferred livestock futures contracts.

Deferred lean hogs contracts jumped for the second straight session — after tumbling to life-of-contract lows during the first three days of this week.

Hog futures rose despite generally weaker prices for the animals in cash markets and a seasonal downward trend in wholesale pork values.

CME October hogs became the most actively traded contract, finishing up 1.35 cents at 55.3 cents/lb. while August hogs edged 0.275 cent lower at 70.15 cents (all figures US$).

Cash hogs in Iowa and southern Minnesota were down a penny at $73.52/cwt and wholesale pork was up 31 cents to $83.82 per cwt, according to the U.S. Department of Agriculture.

“There’s a lack of new information… it’s positioning more than anything,” a cattle and hog futures trader said of Friday’s session.

CME August live cattle settled 0.475 cent lower at 104.55 cents/lb. while the deferred October contract fell only 0.225 cent, to 107.375 cents.

CME August feeder cattle futures settled down 0.3 cent, to 150.725 cents/lb., and September feeders climbed 0.1 cent, to 151.075 cents.

After futures trading closed, feedlots in Texas and Kansas sold cattle to beef packers at about $111/cwt, in deals that were about $2 lower than a week ago.

Commodity Futures Trading Commission weekly data showed that speculative investors in the trading week that ended on Tuesday added to net long positions in live and feeder cattle futures and added to a net short position in hog futures.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago.

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Wheat futures fell nearly three per cent, led by the spot September contract, while corn drifted lower in rangebound trade.

At the Chicago Board of Trade, the November soybean contract settled up 11-1/4 cents at $10.15-3/4 per bushel (all figures US$). September wheat ended down 11-3/4 cents at $4.15-1/4 a bushel and December corn fell 1-1/4 cents at $3.42-1/2 a bushel.

Soybeans climbed after the U.S. Department of Agriculture said private exporters sold 120,000 tonnes of soybeans to unknown destinations for 2016-17 delivery.

USDA also reported export inspections of U.S. soybeans in the latest week at 961,414 tonnes, above a range of trade expectations of 650,000 to 850,000 tonnes.

“Export shipments of soybeans remained unseasonably strong over the past week and are expected to tax our export capacity this fall, necessitating a big crop,” INTL FCStone chief commodities economist Arlan Suderman wrote in a note to clients.

The market is awaiting insights on crop size from this week’s annual Pro Farmer Midwest Crop Tour. The tour, which continues through Thursday, is expected to release findings from South Dakota and Ohio later on Monday.

USDA earlier this month projected record-large yields for the U.S. corn and soybean crops.

After the CBOT close, USDA rated 75 per cent of the U.S. corn crop in good to excellent condition, up from 74 per cent the previous week, while soybean ratings held steady with 72 per cent rated good to excellent.

In wheat, the spot CBOT September contract fell nearly three per cent on technical selling against a backdrop of record-large global wheat supplies, especially from the Black Sea region.

“The record-high grain supply from Russia will more than offset the weather-related crop shortfalls in France and Germany,” Commerzbank said in a note.

Prospects for deliveries against the CBOT September contract added pressure, with first notice day for deliveries looming next week.

The number of contracts registered for delivery against CBOT wheat futures fell by 46 lots on Friday, a possible sign of fresh demand in the cash market. However, traders also noted volumes of hard red winter wheat moving into CBOT delivery points including Chicago and St. Louis.

“There is plenty of talk … of big deliveries of HRW upcoming on the Chicago contract,” ED+F Man analyst Charlie Sernatinger wrote in a note to clients.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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The change, which is considered a blended settlement, will take effect from Dec. 15, pending a regulatory review by the Commodity Futures Trading Commission. Currently, livestock settlements are based solely on pit closing prices at 1 p.m. CT.

“We’re making this change to our CME livestock daily settlement procedures to ensure prices reflect trading activity across all trading venues, which we believe is important to the continued integrity of these markets,” exchange spokesman Chris Grams told Reuters in an e-mailed response to questions.

Livestock markets will be the last of the exchange’s benchmark products to incorporate Globex values into their settlement prices, he said.

Last Friday, combined Globex electronic livestock trading volume totaled 67,563 contracts, compared with 4,882 in the pits or open outcry, based on CME data.

The new settlement procedure will include calculated volume- weighted average prices (VWAP) of outright trades made in the pit and on the Globex platform for each contract month 30 seconds prior to 1 p.m CT.

Two volume-weighted average prices will be combined to produce a single VWAP settlement price for each contract month, which will then be rounded to the nearest tradable tick.

In the event there is no trade activity in a given contract month, the bid that is higher than the last sale or prior day’s settlement price, or the offer that is lower than the last sale or prior day’s settlement price in either the pit or on Globex 30 seconds before 1 p.m. CT, will determine the daily settlement price for that contract.

A detailed factsheet for the proposed changes is available online.

The modifications came after the exchange, the largest livestock futures trading platform in the world, reduced electronic trading hours for cattle and hog futures beginning Monday, Oct. 27 following a survey of its customers. [Related story]

Traders contacted by Reuters said they agreed with the potential changes because thin pit volumes sometimes sparked volatility about 30 seconds before the close.

“It is about time CME changed the settlement price on those hogs to include the screen trade,” said Dan Norcini, who trades livestock futures from his Idaho home.

“Pit locals have been able to jam the close there regardless of what the screen was doing, which is where all the volume is anyway,” he said.

This year, a group of grain traders dropped a lawsuit against CME over the implementation of a blended settlement in the corn and soy markets in 2012. They claimed the change would put them out of business because trades would no longer have to be executed in the pits at the close of trading.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago. Additional reporting for Reuters by Tom Polansek in Chicago.

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October closed up 2.85 cents per pound at 167.9 cents after earlier posting a new contract high of 167.925 cents in electronic trading (all figures US$). December finished 2.975 cents higher at 168.025 cents.

December led advances as traders simultaneously bought that contract and sold February futures in a trading strategy known as bull spreads.

Investors sometimes implemented bear spreads when they sold October, which will expire on Oct. 31, and at the same time bought December.

Futures shrugged off Friday’s modest losses, which stirred talk of at least steady prices for market-ready, or cash, cattle this week. Deteriorating packer margins and tepid wholesale beef demand might limit how much packers will spend for supplies.

Last week, cash cattle in the U.S. Plains traded mostly steady with the week before at $164 per hundredweight (cwt).

Monday morning’s choice wholesale beef price rose 64 cents/cwt from Friday to $249.80. Select dipped 11 cents to $234.67, the U.S. Department of Agriculture said.

Beef packer margins for Monday were a negative $71.50 per head, compared with a negative $71.05 on Friday and a negative $52 a week earlier, according to Colorado-based analytics firm HedgersEdge.com.

CME feeder cattle drew support from short-covering, fund buying and the live cattle market turnaround.

Futures were also underpriced based on their discounts to the exchange’s feeder cattle index for Oct. 17 at 241.84 cents, although the index has declined recently.

October, which will expire on Oct. 30, closed 2.3 cents/lb. higher at 240.75 cents, and November at 236.825 cents, up 2.675 cents.

Hogs end higher

Fallen cash hog and wholesale pork prices weighed on CME hogs futures, traders said.

December finished down 1.425 cent/lb. at 89.15 cents, and February 1.15 cents lower at 86.4 cents.

The morning’s average hog price in Iowa/Minnesota sagged $1.50/cwt from Friday in thin volume to $96.69, according to USDA.

Separate government data showed Monday morning’s wholesale pork price fell $1.66 per cwt from Friday to $109.35, led by the $5.97 drop in ham costs.

Retailers are shopping for pork at lower prices as hog supplies expand seasonally while providing extra tonnage, a trader said.

Producers are trying to beat sliding hog prices by sending them to market ahead of time, which could slow down the seasonal increase in animal weights, he said.

Bearish near-term fundamentals stirred bear spreads, which consisted of traders who sold the December contract and at the same time bought back months.

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

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