U.S. livestock: Bargain buying rallies CME lean hogs

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Most Chicago Mercantile Exchange lean hog contracts ended sharply higher on Monday, fueled by bargain buying following futures’ plunge by their three-cent/lb. price limit on Friday, said traders.

October, which will expire on Oct. 14, closed down 0.1 cent/lb. at 48.925 cents (all figures US$). Most-actively traded December ended 0.2 cent higher at 44.175 cents and February 1.75 cents higher at 50.65 cents.

CME lean hogs will resume their normal three-cent price limit on Tuesday after failing to settle at the newly expanded 4.5-cent limit on Monday.

Futures’ rebound on Monday suggested that last Friday’s steep drop may have accounted for some of the bearish U.S. Department of Agriculture quarterly hog report before it was published, traders and analysts said.

“Friday’s report was not pretty,” a Midwest hog merchant said. “But continued lower cash prices is more about big supplies we have right now than the report.”

Monday morning prices for slaughter-ready, or cash, hogs in the U.S. Midwest were 50 cents to $1/cwt lower, said regional hog merchants.

Generally weak cattle futures

CME live cattle contracts finished mostly weak after investors sold deferred months and at the same time bought the October contract in a strategy known as bull spreads, said traders.

Short-covering lifted futures from session lows after contracts last Friday settled down their three-cent/lb. price limit in response to disappointing cash prices.

October live cattle ended up 0.025 cent/lb. at 98.925 cents. December closed down 0.15 cent at 99.975 cents and February 0.225 cent lower at 100.375 cents.

CME live cattle will return to its normal three-cent price limit on Tuesday after failing to settle at the expanded 4.5-cent limit on Monday.

Last week, packers paid mostly $103-$104/cwt for slaughter-ready, or cash, cattle that brought $105 to $107 a week earlier, said feedlot sources.

“Unfortunately right now it’s just a bad situation. Packers are all booked up and bidding what they want for cattle that are gaining weight,” said Vetterkind Cattle Brokerage president Troy Vetterkind.

CME October feeder cattle drew strength from its discount to the exchange’s feeder cattle index for Sept. 30 at 132.31 cents.

Higher corn futures and lower cash feeder cattle prices pressured other feeder cattle contracts.

October closed 0.825 cents/lb. higher at 123.975 cents. November settled down 0.375 cent at 119.275 cents and January 1.025 cents lower at 115.8 cents.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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