Chicago Mercantile Exchange (CME) hog futures hit a 2-1/2 month high on Wednesday, led by short-covering after wholesale pork prices moved upward, analysts and traders said.
They said CME hogs punched through key moving average resistance, which touched off fund buying and buy stops.
Futures made headway despite the dollar’s rebound and triple-digit U.S. stock market losses tied to disappointing earnings results.
CME June hogs settled up 1.325 cents at 90.35 cents per pound, slightly above where the 20-day and 40-day moving averages converge at 90.31 cents (all figures US$).
July finished at 90.6 cents, 1.3 cents higher. It settled above the 20-day moving average support level of 90.36 cents and below 40-day resistance at 90.69 cents.
Rising wholesale pork values and improved packer margins motivated buyers regardless of weaker cash hog prices.
“Wholesale pork prices appear to be on the mend, suggesting good demand from grocers with better grilling weather around the corner,” a trader said.
Government data Wednesday afternoon showed the average hog price in the most-watched Iowa/Minnesota market fell 61 cents per hundredweight (cwt) from Tuesday to $78.72.
Wednesday morning’s USDA mandatory wholesale pork price, calculated on a plant-delivered basis, was at $83.61/cwt, up $1.74 from Tuesday.
The government last Friday replaced its voluntary pork price data with the new mandatory reports.
Cattle up with beef quotes
Fund buying and wholesale beef price gains helped CME live cattle fend off pressure from outside markets, a trader said.
USDA Wednesday morning quoted the average wholesale choice beef price, or cutout, at $191.96/cwt, $1.51 higher than Tuesday. Select cuts rose 86 cents to $184.79.
Buying in the neighbouring lean hog pit spilled over into the live cattle market, a trader said.
A few investors adjusted positions before the government’s monthly cattle-on-feed report on Friday.
Analysts expect the data to show the number of cattle in feedlots last month fell from a year ago as high-priced corn curbed demand for younger cattle.
Spot April live cattle closed up 1.5 cent/lb. at 126.875 cents. It broke through the respective 10-day and 20-day moving average resistance levels of 126.02 cents and 126.59 cents.
Most-actively traded June ended 1.375 cents higher at 121.825 cents. It nearly matched the 20-day moving average of 121.81 cents after rolling through 10-day resistance at 121.11 cents.
“There’s no way feedlots are going to sell the rest of their cattle at $125/cwt after seeing what the board and the cutout did today,” a trader said.
A small number of cash-based cattle traded in Texas at $125/cwt, down $2 from last week, said feedlot sources. They said spotty packer bids surfaced elsewhere in Texas and the Plains at $125 with no asking prices reported.
The spot April feeder cattle contract was guided by speculation about where it will expire on April 25. Short-covering and the live cattle futures’ rally pulled up remaining CME feeder cattle.
Spot April feeder cattle settled down 0.425 cents/lb. at 136.525 cents.
Most-actively traded May closed at 140.9 cents, gaining 0.85 cent. August ended at 147.5 cents, 1.025 cents higher.
— Theopolis Waters writes for Reuters from Chicago.