U.S. livestock: CME hog futures resume slide to six-year low

(Regis Lefebure photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange lean hogs returned to their lowest level in six years on Monday, pressured by softer cash prices and profit-taking after a futures rally last Friday, traders said.

February closed 2.6 cents per pound lower at 61.275 cents, and April down 2.525 cents, to 66.75 cents (all figures US$).

Monday afternoon’s average market-ready (cash) hog price in Iowa/Southern Minnesota slipped 35 cents/cwt from Friday to $60.59, the U.S. Department of Agriculture said.

Separate USDA data showed the morning’s wholesale pork price at $73.70/cwt, up 76 cents from Friday when it was down $1.03 from the previous session.

Sufficient hog numbers and sputtering wholesale pork sales caused packers to spend less for supplies, which sustained their profitable margins.

The U.S. West Coast labour dispute has backed up significant amounts of U.S. pork for export that has to be disposed of domestically, said Linn Group analyst John Ginzel.

West Coast ports resumed full operations on Monday after shippers suspended loading and unloading last weekend.

Investors sold the February contract, which will expire on Feb. 13, and simultaneously bought back months that were pressured by anticipation of increased supplies ahead.

More live cattle gains

CME live cattle futures closed in positive territory for a third straight session, helped by their discounts to last week’s better-than-expected cash prices, traders and analysts said.

February closed up 2.375 cents/lb. to 158.45 cents, and April 2.625 cents higher at 153.65 cents.

Last week, cash cattle in the U.S. Plains sold at $160-$162.50/cwt, steady to $3.50 higher than the week before, feedlot sources said.

Bullish investors believe that last week’s short-bought packers, fewer cattle for sale and recent futures’ gains might underpin cash prices for this week.

Market bears said unprofitable packer margins and competition from less-costly pork and chicken could weigh on cash prices.

The afternoon’s choice wholesale beef price declined 60 cents from Friday to $238.48. Select cuts fell $1.51, to $232.30, the USDA said.

Fund buying developed after April and June futures surpassed the 20-day moving average of 151.73 cents and 144.9 cents, respectively.

Technical buying, CME live cattle market advances and steady-to-higher cash feeder cattle prices drove up the exchange’s feeder cattle contracts.

March closed 4.175 cents/lb. higher at 203.625 cents, and April up 4.125 cents to 203.275 cents.

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

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