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U.S. hogs extend gains on cash prices

U.S. hog futures gained for a fifth straight session on Monday in response to packers raising bids for hogs in the cash market as wholesale pork demand improved, analysts and traders said.

Live cattle at the Chicago Mercantile Exchange (CME) posted modest losses while feeder cattle ended firmer.

CME hogs drew support from the push by packers for hogs amid perceptions of tight supplies and as grocers gear up to feature pork during National Pork Month in October.

The average hog price in the most-watched Iowa/Minnesota market was $73.54 per hundredweight (cwt), $3.68 higher than on Friday, according to the U.S. Department of Agriculture.

USDA estimated Monday’s wholesale pork price at $78.34/cwt, up 50 cents from Friday.

USDA’s cold storage report on Friday showed end-of-August pork stocks at 580.8 million pounds, the highest ever for that month.

"Even in the face of huge storage, the market is continuing the general trade for the past week or so, which is higher. The seasonal trend from this September bounce would imply we could at least go into Oct. 1," said Allendale Inc. chief strategist Rich Nelson.

The government estimated Monday’s kill at 436,000 head. That was the same as a week earlier and 10,000 more than the same period a year ago.

Spot October CME hogs closed 0.7 cent/lb. higher to 76.5 cents. Most-actively traded December ended at 75.35 cents, up 0.375 cent.

Cattle slip

Live cattle futures closed weak on slowed wholesale beef demand and bear spreading tied to the government’s monthly cattle-on-feed report on Friday, traders and analysts said.

USDA’s data showed a bigger-than-expected drop in the number of cattle placed in feedlots in August, which at times benefited deferred months, while surprisingly small marketings pressured nearby contracts

October futures sellers also cited the pullback in wholesale beef values.

The wholesale price for choice beef dropped 65 cents to $192.69/cwt and select cuts fell $1.43, to $182.43/cwt, USDA said.

"This typically is not a good time of year for beef that’s at the doorstep of October National Pork Month, when retailers receive incentives for featuring pork," said senior AgriVisor market analyst Dale Durchholz.

Meanwhile, futures investors await this week’s cash cattle trade as packers curb slaughters to strengthen their weak margins and underpin wholesale beef values.

HedgersEdge.com estimated the average beef packer margin for Monday at negative $31.10 per head, compared with negative $23.50 on Friday and negative $38.95 for Sept. 17.

Packers on Monday processed 128,000 head of cattle, which was the same as a week earlier and 2,000 less than a year ago for the same period, according to USDA.

Spot October live cattle closed down 0.225 cent/lb., to 125.3 cents. Most-active December ended at 128.4 cents, down 0.075 cent.

Aside from weak spot-September CME feeder cattle, other trading months edged upward as the price for corn wilted, easing feed input costs.

Thinly-traded spot September ended down 0.025 cent/lb. to 143.775 cents before it expires on Thursday.

Most-actively traded October closed at 147.4 cents, up 0.175 cent, and November ended up 0.1 cent, at 148.800 cents.

— Theopolis Waters writes for Reuters from Chicago.

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